Which of the following is a potential benefit of high stock turnover?

• A. Bulk-buying discounts reduce costs.
• B. It increases holding costs.
• C. It lowers markups.
• D. It reduces sales.

Answer: (A)

High stock turnover means inventory is sold and replaced quickly. This efficiency frees up cash tied up in stock and reduces the costs of holding inventory, such as storage and obsolescence risk. Because stock moves fast, you can place larger, regular orders with suppliers to qualify for bulk-buying discounts, which lowers the overall cost of purchases. That potential saving is the key benefit of high turnover. It doesn’t imply higher holding costs, it doesn’t inherently lower markups, and it doesn’t cause a drop in sales.