what is a good inventory turnover

what is a good inventory turnover refers to the rate at which a business sells and replaces its inventory over a specific period. When users search for “what is a good inventory turnover,” they are looking for information on how to measure the efficiency of inventory management. A good inventory turnover ratio varies by industry, but generally, a higher ratio indicates that a business is selling products quickly and efficiently, which is a positive sign of demand and operational effectiveness. A low turnover rate, on the other hand, could suggest overstocking, slow-moving products, or inefficiencies in the supply chain. To calculate the inventory turnover ratio, businesses divide the cost of goods sold (COGS) by the average inventory during a period. By monitoring and optimizing inventory turnover, businesses can improve cash flow, reduce storage costs, and ensure that they are meeting consumer demand.