This ratio is also known as Inventory turns.
It is part of the logistics ratios for inventory analysis and of the financial ratio for the management quality analysis.
It measures the number of times inventory is sold during a period. This ratio is a good indicator of the quality of inventory (obsolescence) and of the supply and inventory control efficiency. This indicator based on past values of sales has the inconvenience not to take into account seasonal and promotional variations. It can be more realistic to calculate it on the basis of sales forecasts.