What does inventory turnover measure in retail operations?

Inventory turnover is a key performance indicator that measures the speed at which stock is sold and replaced over a specific period of time. It reflects how efficiently a retailer is managing its inventory. A high inventory turnover indicates that a retailer is selling inventory quickly and can suggest strong sales performance or effective inventory management. This efficiency helps businesses to minimize carrying costs and reduce the risk of markdowns due to unsold goods.

In contrast, the other options do not accurately capture the essence of inventory turnover. The total number of products in stock pertains to the inventory level but does not analyze how quickly those products are sold. The cost of purchasing inventory focuses on the expenses related to acquiring products but does not provide insight into sales velocity. Lastly, the profit margin on products addresses profitability rather than turnover rates, making it another distinct metric unrelated to the measurement of how quickly stock is sold.