GENERAL KNOWLEDGE

Detailed explanation-1: -A low inventory turnover will often mean you’re holding too much stock, increasing your carrying costs, such as warehouse costs, utilities, insurance and opportunity costs.

Detailed explanation-2: -Low Inventory Turnover Ratio This could suggest a lack of demand, an outmoded product, or a poor sales/ inventory policy, among other things. Low inventory turnover ratios put your company at a disadvantage and can lead to a variety of problems.

Detailed explanation-3: -What does low inventory turnover mean? A rate of 1 or less means you have excess inventory. For example, if you sell 20 units over a year, and always have 20 units on-hand (a rate of 1), you invested too much in inventory since it is way more than what’s needed to meet demand.

Detailed explanation-4: -It considers the cost of goods sold, relative to its average inventory for a year or in any a set period of time. A high inventory turnover generally means that goods are sold faster and a low turnover rate indicates weak sales and excess inventories, which may be challenging for a business.