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How does inventory affect a firm’s financial performance?
1 Answer
- MitchLv 51 decade agoFavorite Answer
If they turn over inventory rapidly, lots of good things happen. More cash gets generated. If they don't inventory becomes an "idle" asset on their balance sheet in that it is an asset, but an account receivable or cash for the inventory would be a much more valuable asset. If the inventory gets really old, it can become stale, obsolete, or less valuable in other ways that could force the company to have to "write off" the asset.
