Why is high inventory turnover considered important?

High inventory turnover is considered important because it indicates effective sales and inventory management. A high turnover ratio suggests that a business is successfully selling its stock at a rapid pace, which often reflects strong consumer demand for the products offered. It can also mean that the retailer is efficiently managing its inventory levels, avoiding excess stock that can lead to increased carrying costs and potential obsolescence.

Additionally, effective inventory management means that the retailer is likely able to maintain a fresh selection of merchandise, appealing to customers and fostering repeat visits. It demonstrates the business's ability to strike a balance between having enough inventory to meet demand without overstocking, which could tie up capital and reduce profitability.

Other options suggest negative outcomes associated with inventory management. For instance, a high level of customer returns or excess inventory levels would imply issues rather than commendable performance in sales and inventory control. Similarly, poor product selection would indicate challenges in meeting customer preferences and expectations, rather than the effectiveness implied by high inventory turnover.