Inventory Turnover Rate is a measure of a business’s efficiency in managing its inventory levels. It is calculated by dividing the cost of goods sold for a given period of time by the average inventory balance for that same period. The higher the turnover rate, the more efficient the company is at producing and selling products. A high turnover rate reflects that the company is efficiently manufacturing and stocking merchandise to meet customer demand. On the other hand, a low turnover rate indicates inefficient inventory management or sluggish demand. By monitoring your business’s inventory turnover rate regularly, you can stay on top of any potential problems with your stock levels.