What is Inventory Turnover?
A definition of Inventory Turnover
“Inventory turnover is a ratio showing how many times a company’s inventory is sold and replaced over a period. It measures how efficiently a company manages its stock of goods.”
Business Glossary > What is Inventory Turnover?
Examples of Inventory Turnover in a Sentence:
The company improved profitability by increasing its inventory turnover.
High inventory turnover indicates strong sales.
Low inventory turnover might suggest overstocking.
Why is Inventory Turnover Important in Business?
Understanding inventory turnover helps businesses evaluate how well they manage stock and respond to consumer demand. High turnover signifies efficient inventory management, which is crucial for maintaining profitability and minimizing holding costs.
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Associated Terms
Here are some associated business terms and synonyms for “Inventory Turnover”:
- Stock Turnover
- Inventory Turns
- Stock Rotation
Walmart Inventory Turnover
Walmart is known for its high inventory turnover rate, which allows it to maintain low prices and fresh stock. By efficiently managing its inventory, Walmart can quickly respond to market demands and reduce holding costs.
Final Notes on Inventory Turnover
Businesses should aim to optimize their inventory turnover to strike a balance between having enough stock to meet demand and not overstocking, which can tie up capital and increase costs.
This has been a definition of Inventory Turnover meaning.
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