Question

Which company is most likely to have a higher inventory turnover than its competitors within the same industry?

1) a company with higher-priced goods and lower gross profit
2) a company with lower-priced goods and lower gross profit
3) a company with higher-priced goods and higher gross profit

Answer 1

A company with lower-priced goods and lower gross profit is likely to have higher inventory turnover, stimulated by the increased sales volume that lower prices can generate.

Step-by-step explanation:

The company that is most likely to have a higher inventory turnover than its competitors within the same industry is the one with lower-priced goods and lower gross profit. A lower price point often stimulates higher sales volume, which in turn can lead to higher inventory turnover. While higher gross profits can be indicative of strong sales or premium pricing, it does not inherently suggest a higher rate of inventory turnover, which is more directly related to the frequency of sales transactions.