How can carrying costs affect a pharmacy's profitability?

Carrying costs significantly influence a pharmacy's profitability by directly affecting financial resources tied up in inventory management. When a pharmacy holds excess inventory, it incurs various carrying costs such as storage, insurance, spoilage, and obsolescence. These costs can eat away at profit margins, particularly if the inventory remains unsold for extended periods.

Unsold inventory doesn't just represent capital that could be used elsewhere; it also risks becoming outdated or expired, leading to potential losses when the pharmacy has to write off these products. As a result, the overall financial health of the pharmacy can be compromised because money that could be utilized for other investments, expenses, or potential profits is instead locked up in inventory that brings no return.

In contrast, the other options don't accurately depict the impact of carrying costs on profitability. While they may touch on related aspects of a pharmacy’s operations, they do not capture the direct financial implications of carrying costs as effectively as the correct answer.