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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Overtrading
Hi John,
May i know the reason why slowing down of inventory turnover is a sign of overtrading?
Sales increases rapidly when company is experiencing overtrading, the inventory drop faster than usual, is the inventory turnover supposed to increase?
Thanks.
Have you watched my free lectures on the management of working capital?
As I explain in the lectures, it is common in a situation of over-trading for inventory levels to get higher than they should be and therefore for the inventory turnover to fall.