Inventory Turnover Ratio is a ratio
showing how many times a company's inventory is sold and replaced over a
certain period of time. A high
turnover ratio is a positive indicator that products are not being left to
deteriorate. An example of low turnover may be because of overstocking,
obsolescence (products being obselete) or problems with the product itself or
marketing efforts. The reverse of this
may indicate inadiquate inventory levels.
Please note that different industries will have different ratios due
to the different nature of product turnover.