Choose from the following a symptom which is not relating to "Over Trading"?
Correct answer: B. Low inventory turnover ratio
- A. Cash shortage
- B. Low inventory turnover ratio
- C. Low current ratio
- D. High inventory turnover ratiO
Explanation
Overtrading commonly causes cash shortages, a low current ratio, and a high inventory turnover ratio because sales expand faster than working capital. A low inventory turnover ratio indicates slow-moving stock, so it is not the usual symptom.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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