Asked by Chris Palomino on Jun 25, 2024
Verified
Selling obsolete inventory below cost just to get rid of it will tend to decrease the inventory period.
Inventory Period
The average time it takes for a company to turn its inventory into sales, indicating how quickly products are sold.
Obsolete Inventory
Items in stock that are out of date or no longer in demand, often leading to reduced value or write-offs.
- Identify strategies to manage and optimize the cash cycle.
Verified Answer
SP
Sherika PrinceJun 28, 2024
Final Answer :
True
Explanation :
Selling obsolete inventory, even below cost, reduces the total inventory on hand, which in turn decreases the inventory period by shortening the time inventory remains in stock before being sold.
Learning Objectives
- Identify strategies to manage and optimize the cash cycle.
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