Certified Management Accountant Practice Exam 2026 - Free CMA Practice Questions and Study Guide

A lower inventory turnover ratio indicates that a company is not selling its inventory quickly. This can signify overstocking, meaning that the company may have accumulated more inventory than it can sell within a reasonable timeframe, leading to higher holding costs and potential issues with obsolescence. Additionally, slow sales may accompany a lower turnover ratio, suggesting that products are not moving off the shelves as expected.

Moreover, a lower turnover ratio may indicate low demand for the products being sold. If consumers are not buying the products, this results in a buildup of inventory, which can further contribute to the issue of excess stock. Therefore, both overstocking and slow sales, as well as the inference of low demand, are intertwined and stem from a lower inventory turnover ratio.

Thus, the significance of a lower inventory turnover ratio aligns with the points made in both options B and C, making option D the most comprehensive answer.