What is the inventory turnover rate based on given profits, costs, and inventory value?

The inventory turnover rate is a key metric that indicates how efficiently a company manages its inventory. It is calculated by dividing the cost of goods sold (COGS) by the average inventory for a specific period. This number reflects how many times inventory is sold and replaced over that period.

In this case, if the value calculated for the inventory turnover rate is 19.83, it suggests that the company sold and replaced its inventory roughly 19.83 times during the specified period. This high turnover rate typically indicates effective inventory management and strong sales performance, as it shows the company is efficiently turning its inventory into revenue.

For context, a lower inventory turnover rate might suggest overstocking or slowing sales, which can lead to increased holding costs and potential waste, particularly for perishable goods. Understanding the inventory turnover rate helps businesses assess their operational efficiency, inventory management practices, and even market demand. Therefore, with a turnover rate of 19.83, it represents a healthy and efficient approach to inventory management in the given scenario.