What financial metric assesses how well inventory is managed?

Inventory Turnover is a key financial metric that evaluates how effectively a business manages its inventory. It measures the number of times inventory is sold or used during a specific period, typically a year, and indicates how quickly a company can convert its inventory into sales. A higher inventory turnover rate generally suggests efficient inventory management, as it implies that a company is selling its products quickly and not overstocking.

In contrast, the other options focus on different aspects of financial performance. Gross Margin relates to the difference between sales and costs of goods sold but doesn't directly assess inventory management. The Current Ratio measures a company's ability to pay its short-term obligations and is more about liquidity than inventory efficiency. Return on Assets evaluates how effectively a company utilizes its assets to generate profits, but it also does not directly address how inventory is managed. Consequently, Inventory Turnover is specifically designed to inform businesses about their inventory management practices.