Inventory Turnover: Key Metric for Business Efficiency

What is the significance of inventory turnover in business operations?

A. Measures the efficiency of sales

B. Indicates stock liquidity

C. Helps optimize inventory levels

Answer:

C. Helps optimize inventory levels

Inventory turnover is a crucial metric for businesses as it helps optimize inventory levels, reduce carrying costs, and improve overall operational efficiency. It indicates how many times a company's inventory is sold and replaced over a specific period, showing the efficiency of sales and stock liquidity. By understanding and monitoring inventory turnover, businesses can make informed decisions about their production, purchasing, and sales strategies to enhance profitability and competitiveness in the market.