what does inventory turnover ratio mean

what does inventory turnover ratio mean refers to a financial metric that measures how often a company sells and replaces its inventory over a specific period, typically a year. A higher turnover ratio indicates that a company is efficiently managing its inventory, while a lower ratio suggests that inventory is not selling as quickly. Businesses use this metric to assess the effectiveness of their inventory management strategies and to optimize purchasing and stocking decisions. A higher turnover ratio can also improve cash flow by reducing the amount of capital tied up in unsold stock.