An inventory turnover ratio:

1. that is significantly higher than the industry average may indicate that a company is maintaining inventory levels that are too high.

2. that is significantly lower than the industry average usually indicates difficulty with selling that inventory and the likelihood of incurring lower than average storage costs.

3. measures the number of times, on average, the inventory was sold during the period.

4. is a measure of solvency that focuses on efficient use of inventory.