Inventory turnover is a measure of efficiency that calculates how many times a company sells or replaces its inventory in a given period. It is calculated by dividing the cost of goods sold by the average inventory value during the period. A ratio between 5 and 10 is considered good for most industries, indicating frequent restocking. The inventory turnover ratio is also known as the stock turnover ratio and can be calculated by dividing inventory days by 365. This ratio is an important metric for measuring inventory management efficiency. A higher ratio indicates more efficient inventory management.