what does higher inventory turnover mean

what does higher inventory turnover mean refers to the rate at which a company sells and replaces its inventory during a given period. A higher inventory turnover means that a company is selling its inventory more quickly and efficiently. This is generally considered a positive indicator of business performance, as it suggests that the company’s products are in demand and that the business is effectively managing its stock. High inventory turnover can lead to improved cash flow and reduced holding costs. However, it’s important to balance high turnover with adequate stock levels to avoid stockouts, which could negatively affect sales.