Inventory Turns Ratio, or ITR, is a key indicator of business performance that measures the frequency with which a company sells its inventory over a certain period. It’s calculated by dividing the cost of goods sold by the average inventory balance: ITR = Cost of Goods Sold / Average Inventory. Higher ITR values indicate more efficient inventory management, as companies are able to sell their inventory faster and replenish it more often. With an appropriate ITR number, businesses are better equipped to meet customer demand without sacrificing profits.