A lower inventory turnover ratio indicates more efficient use of inventories.

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A lower inventory turnover ratio indicates that a company is holding onto its inventory for a longer period of time, which can lead to higher storage and holding costs, as well as potentially outdated or unsellable inventory. This is typically seen as less efficient use of inventories. Therefore, a higher inventory turnover ratio is generally preferred as it suggests that a business is efficiently managing its inventory levels and quickly moving products off the shelves.

A Lower Inventory Turnover Ratio Indicates More Efficient Use of Inventories