what does a higher inventory turnover ratio mean

what does a higher inventory turnover ratio mean refers to a business’s ability to efficiently sell and replace its inventory. A higher inventory turnover ratio indicates that a company is selling products quickly and restocking them frequently, which is a sign of effective inventory management. This can result in lower storage costs and reduced risk of obsolete stock. For retailers and wholesalers, a high turnover ratio is desirable because it indicates that products are in demand and that the business is maintaining a lean inventory with minimal excess.