What does inventory turnover indicate about a business?

Inventory turnover is a key performance metric that shows how effectively a business is managing its inventory. A high inventory turnover rate typically indicates that a company is selling goods quickly and replacing them, which is a sign of efficiency in stock management. This means that the business is able to convert its inventory into sales effectively, minimizing holding costs and the risk of obsolescence.

Focusing on efficiency, a high turnover ratio suggests that the products offered are in demand, and the inventory levels are being optimized to meet that demand without overstocking. It reflects the business's ability to manage the balance between supply and demand, ensuring that resources are not tied up in unsold products.

Other options do not accurately represent what inventory turnover indicates. For instance, a ratio of current to total assets relates to a company's financial position rather than inventory management. The percentage of expired inventory pertains to product freshness and does not speak to sales efficiency. Likewise, the speed of product returns addresses customer satisfaction and product quality issues rather than inventory management effectiveness. Therefore, the correct choice emphasizes the core principle of inventory turnover in relation to operational efficiency in managing stock.