Glossary Discription

Inventory turnover rate measures how frequently inventory is sold and replaced within a given period. It is a key metric of inventory efficiency and operational performance. Higher turnover rates indicate effective inventory management, while low turnover may suggest overstocking or slow-moving goods. 

Characteristics:

• Reflects efficiency of stock usage
• Identifies slow-moving or obsolete items
• Influences storage costs and cash flow
• Calculated as cost of goods sold divided by average inventory