oboloo Glossary

Inventory Turnover Ratio High Or Low

oboloo Glossary

Inventory Turnover Ratio High Or Low

Inventory Turnover Ratio is a key measure of a business’s performance and efficiency. It indicates how many times, on average, a company’s inventory is sold and replaced each year. A high Inventory Turnover Ratio is generally considered to be good news, as it means the company is selling its stock quickly and not letting it build up unnecessarily. Conversely, a low ratio indicates that items are taking an unusually long time to sell and may need reexamining. It pays to keep a close eye on your inventory turnover: too high, and profits will suffer from overstocking; too low, and it could signal a problem with pricing or other factors preventing your products from being sold.