What is "inventory turnover" a measure of?

Inventory turnover is a critical metric that measures the rate at which inventory is sold and replaced over a specific period. This calculation helps businesses assess how efficiently they are managing their stock levels and how well their products are selling. A high inventory turnover rate typically indicates strong sales and effective inventory management, meaning that products are moving quickly through the supply chain and being replaced in a timely manner. Conversely, a low inventory turnover can suggest overstocking or weak sales, which could lead to increased holding costs and potential obsolescence of goods.

While the other options are related to inventory and warehouse management, they do not accurately describe the concept of inventory turnover. For instance, storage capacity pertains to how much inventory a warehouse can hold, while the total value of goods reflects the monetary worth of the inventory rather than its movement. The average lifespan of products in storage relates to how long items are kept rather than how often they are sold and replenished, which is the essence of inventory turnover. Thus, the correct understanding of inventory turnover is essential for effective inventory control and fiscal health in a logistics context.