Inventory Turnover Rate
A measure of how often inventory is sold and replaced within a channel, indicating the efficiency of the channel in moving products.
Implications
A financial ratio that measures how many times a company�s inventory is sold and replaced over a period, often used to assess the efficiency of inventory management practices and the liquidity of the stock.
Example
Example: A restaurant calculates its inventory turnover rate as 8 times per year, indicating that it sells and replaces its food inventory approximately every 45 days, which helps in assessing whether inventory is being managed efficiently.
Related Terms
Different from turnover ratio, which might refer to employee turnover, inventory turnover rate specifically focuses on the movement of inventory and is a key indicator of operational efficiency.
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