inventory turnover.

inventory turnover Inventory turnover is a metric that measures how quickly a company sells and replaces its inventory over a specific period, typically a year. A high inventory turnover rate indicates that a company is selling products quickly, which is generally positive for cash flow. On the other hand, a low turnover rate could indicate overstocking or slow sales. Businesses calculate inventory turnover by dividing the cost of goods sold by the average inventory during the period. This metric helps businesses optimize inventory levels and improve profitability.