Inventory Turnover Ratio
Formula: Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
The Inventory Turnover Ratio measures how many times a company's inventory is sold and replaced over a period. It is an important metric for evaluating the efficiency of a company in managing and selling its inventory. A higher turnover ratio indicates better performance and efficiency in managing inventory stock. It is particularly important in retail and manufacturing sectors where inventory management is crucial for business success.