CLEP Marketing Practice Exam 2026 – All-in-One Guide to Achieve Top Scores!

"Open to buy" is a financial metric used by retailers to manage their inventory and cash flow effectively. It represents the amount of money that a retailer has available to spend on new inventory without exceeding their budgeted spending levels. This figure is crucial as it helps retailers determine how much additional stock they can purchase while maintaining a healthy cash flow.

This metric becomes particularly important in inventory management, as it allows retailers to make informed purchasing decisions that align with their sales forecasts and cash availability. By knowing how much they can invest in new inventory, retailers can avoid stockouts or over-purchasing, both of which can negatively affect their financial performance.

While other options mention concepts like inventory levels, supplier deliveries, and credit limits, they do not directly reflect the concept of "open to buy" as it is specifically tied to cash flow availability for managing purchases. Thus, understanding "open to buy" offers a better insight into the financial maneuverability and operational strategy of a retailer.