Inventory Ratio Formula is a powerful tool used by businesses to measure the inventory performance and profitability of their operations. It is calculated by dividing the Cost of Goods Sold (COGS) by the Average Inventory value, expressed as a percentage. This ratio can help tell you how well your business is managing inventory: if it is high, you may have too much inventory on hand or not enough sales; if it is low, you may need to purchase higher quality goods or increase production capacity. By understanding this ratio, you can ensure that your business is running efficiently and maintain a healthy bottom line.