The Inventory Turnover Ratio is a widely-used metric for measuring the effectiveness of business inventory management. It is calculated by dividing the total value of goods sold over a given period by the average inventory held during that same period. This number provides an indication of how efficient and cost-effective a company’s inventory management is — and in turn helps to guide decisions around stock levels, purchasing policies and more. A higher turnover ratio is usually indicative of better management, while a lower one means there may be too much stock being held, tying up cash and leading to lost profit. Keeping tabs on your Inventory Turnover Ratio can help ensure you’re making the most of your inventory investments!