Question

What is indicated by High Inventory Turnover Ratio?

What does High Inventory Turnover Ratio indicates?

Answer 1

When the inventory turnover ratio is high, it shows that the inventory is being converted into revenue from operations at a faster rate. In the case that this ratio has improved, it indicates that either the same volume of Revenue from Operations has been maintained with a smaller investment in inventory or that the volume of Revenue from Operations has increased without an increase in inventory.