Inventory turnover is a financial metric that measures how many times a company sells and replaces its inventory over a specific period, usually a year. It helps businesses understand how efficiently they are managing their stock. A higher turnover rate indicates strong sales and effective inventory management, while a lower rate may suggest overstocking or weak sales. To calculate inventory turnover, divide the cost of goods sold (COGS) by the average inventory during the same period. This ratio provides insights into sales performance and can guide companies in making informed decisions about purchasing and production strategies.