Is a high inventory turnover ratio good?

The more inventory turnover a company has, the better. A high inventory turnover usually means that a company is selling many goods quickly, and there is much demand for their products.

However, you should be wary of this eCommerce metric and find out whether solid sales or inefficient stockings are causing the high turnover ratio, so you can figure out how to improve your stocking. If growing sales is the reason, then this is a good sign.

A company's inventory turnover ratio is a measure of inventory being sold during a particular period. The higher the ratio, the more quickly the company has sold off its inventory and generated revenue. A high inventory turnover ratio is generally seen as a victory. However, there are some circumstances where a high turnover ratio can indicate problems such as insufficient inventory. So, you have to be cautious and manage your inventory efficiently.