Turnover Ratio

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Definition of 'Turnover Ratio'

The turnover ratio is a financial ratio that measures the number of times a company's inventory is sold or used in a given period. It is calculated by dividing the cost of goods sold by the average inventory. The turnover ratio is an important measure of a company's efficiency in managing its inventory. A high turnover ratio indicates that the company is selling its inventory quickly and efficiently, while a low turnover ratio indicates that the company is holding on to its inventory for too long.

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