- This topic has 1 reply, 2 voices, and was last updated 11 months ago by .
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
OpenTuition recommends the new interactive BPP books for March 2025 exams.
Get your discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA APM Exams › Current ratio and inventory
If current ratio = more than 1 , Is the inventory slow moving?
Not necessarily. You could have a CR>1 with no inventory at all.
Of course, higher inventory will increase the CR, but that does not necessarily mean inventory is sticking. For example, current liabilities might be very low.
The best indication of slow moving inventory is to calculate the inventory days: inventory x 365/cost of sales. If CoS not available use purchases. If this rises from our uearto the next order is high compared to industry averages) it implies inventory might be slow-moving.