Inventory turnover ratio

Definition

The inventory turnover ratio measures how many times a company sells and replaces its stock of goods during a given period. It is a key indicator of the efficiency in managing inventory and fulfilling customer orders.

Related terms

Cost of Goods Sold (COGS): Represents the direct costs attributable to the production of the goods sold by a company.

Gross Margin:

The difference between revenue and cost of goods sold divided by revenue, expressed as a percentage; it measures how much a company retains on each dollar of sales to cover its other costs.

Working Capital:

The difference between a company's current assets and current liabilities, indicating the short-term liquidity and operational efficiency