Which of the following statements most accurately reflects the relationship betw

Question

Which of the following statements most accurately reflects the relationship between
the startup cash required for a company and its anticipated inventory turnover ratio?

a. The higher a company's average inventory turnover, the greater the amount of startup cash it will require.
b. The higher a company's average inventory turnover, the smaller the amount of
startup cash it will require.
c. A company's startup cash requirement is equal to its average inventory turnover
times 12.
d. There is no connection between a company's average inventory turnover and the
amount of startup cash it will require.

Explanation / Answer

b. The higher a company's average inventory turnover, the smaller the amount of startup cash it will require.

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