inventory turnover

Inventory turnover is a measure of how quickly a business sells and replaces its stock of goods over a specific period, usually calculated annually. A higher turnover rate indicates that a company efficiently sells its products, potentially leading to increased sales and reduced storage costs. Conversely, a lower turnover may suggest excess inventory or weak sales, which can tie up cash. Essentially, it’s an important indicator of business efficiency and overall health, reflecting how well a company manages its inventory relative to its sales.