inventory turnover explanation

inventory turnover explanation is a financial metric that measures how many times a company’s inventory is sold and replaced over a specific period. It is calculated by dividing the cost of goods sold (COGS) by the average inventory during the period. A high inventory turnover indicates that a company is efficiently selling its products and managing its inventory, while a low turnover may suggest overstocking or slow sales. Inventory turnover is an important indicator for businesses to optimize inventory levels and improve cash flow.