What is analyzed in inventory turnover analysis?

Inventory turnover analysis focuses on measuring how quickly inventory is sold and replaced over a specific period. This metric is crucial for businesses as it provides insights into the efficiency of inventory management and sales performance. A higher turnover rate indicates that products are selling quickly, which often suggests strong demand and effective sales strategies.

This analysis is essential for understanding how well a company is managing its inventory levels. It helps businesses to minimize excess stock and associated holding costs while ensuring that they have enough stock to meet customer demand. By evaluating turnover rates, companies can make informed decisions about purchasing, marketing, and production strategies to optimize their operations.

In contrast, other options address different aspects of inventory management or customer relations. For instance, while the duration products spend in storage is related to turnover, it does not capture the speed of sales and replenishment. The overall cost of inventory management refers to expenses rather than performance metrics, and customer satisfaction with product availability is a measure of market perception rather than an operational metric.