Inventory Turnover is a financial metric that measures how quickly a company sells and replaces its inventory over a specific period, usually a year. It is calculated by dividing the cost of goods sold (COGS) by the average inventory during that period. A higher turnover rate indicates efficient inventory management and strong sales, while a lower rate may suggest overstocking or weak demand. This metric is crucial for businesses as it helps assess operational efficiency and cash flow. By understanding Inventory Turnover, companies can make informed decisions about purchasing, production, and sales strategies to optimize their inventory levels and improve profitability.