what is inventory turnover rate

what is inventory turnover rate is a financial metric used to measure how efficiently a company sells and replaces its inventory over a given period. A higher inventory turnover rate indicates that a company is selling its inventory quickly, which is generally seen as a positive sign of operational efficiency. This rate is calculated by dividing the cost of goods sold (COGS) by the average inventory during the period. A high turnover rate can help businesses reduce storage costs and improve cash flow.