When you look at inventory turnover (cost of goods sold divided by average daily inventory),a high ratio means that a company is more efficient than those with lower ratios.

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A higher inventory turnover ratio means that a company is selling their inventory at a faster rate, which indicates that they are able to manage their inventory efficiently and avoid excess inventory buildup. This can lead to improved cash flow and profitability. Therefore, a higher ratio is generally considered a good sign.

When You Look at Inventory Turnover (Cost of Goods Sold