What is inventory turnover ?

Definition

The number of times a business sells and replaces its stock of goods within a certain period is known as inventory turnover or inventory turnover ratio. It evaluates the cost of items sold about its average inventory over the course of a year or any given period. A high inventory turnover rate suggests that things are sold more quickly, whereas a low turnover rate indicates weak sales and surplus stocks, both of which can be problematic for a company. To analyze competitiveness and intra-industry performance, inventory turnover can be compared to historical turnover ratios, planned ratios, and industry averages. Industry-specific inventory rotations might vary significantly.