the inventory turnover ratio:

the inventory turnover ratio is a financial metric used to measure how quickly a company sells and replaces its inventory over a given period. The formula for calculating inventory turnover is: Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory. A high turnover ratio indicates that a business is selling its products efficiently, while a low ratio suggests overstocking or slow sales. This ratio is an important indicator of operational efficiency, helping businesses assess the effectiveness of their inventory management practices.