Inventory Turnover The inventory turnover ratio measures the speed with which inventory moves through the firm and gets converted into sales. Inventory turnover = Cost of Goods Sold / Average Inventory Imagine that you are an accountant for a manufacturing firm. In your industry, annual inventory is about 1.8 times. In your evaluation of company performance, you notice the following. Inventory turnover in Q1 of 2016 was 1.9 times Inventory turnover in Q1 of 2017 was 1.7 times Inventory turnover in Q1 of 2018 was 1.4 times What does this trend indicate? Multiple Choice Olt indicates that the company is becoming more efficient in converting its inventory into sales. It indicates that the company is becoming less efficient in converting its inventory into sales