The FIFO Inventory Turnover Ratio is a measure of the speed and efficiency at which inventory is sold and replaced in a business. It is calculated by dividing the cost of goods sold (COGS) in a specific accounting period by the average amount of inventory held during that period. This ratio helps businesses understand how well they are managing their inventory, so they can make sure they have enough stock on hand to meet customer demand without wasting valuable resources on excessive amounts of unsold product. By implementing systems such as ‘first-in-first-out’ (FIFO) to keep track of inventory and analyzing this ratio, businesses can determine their inventory turnover rate and work towards increasing efficiency and profit.