Which of the following is a benefit of high inventory turnover?

High inventory turnover is an important metric for retail and inventory management, reflecting how quickly products are sold and replaced over a certain period. The primary benefit of a high turnover rate is that it typically leads to lower expenses associated with holding or sitting inventory.

When inventory moves quickly, it reduces the costs tied up in storage, handling, and insurance, as well as minimizing the risk of obsolescence or loss. This allows a business to maintain a leaner inventory, which can lead to improved cash flow and more efficient operations. Lower expenses on sitting inventory also mean that funds can be reinvested into purchasing new stock, operational improvements, or marketing efforts.

This concept contrasts sharply with options that suggest increased markdowns or higher storage costs, which are generally negative aspects of poor inventory management. Likewise, reduced cash flow for new products is contrary to the benefits of a healthy turnover rate, which ideally improves liquidity and enables a business to invest in new inventory effectively.