why is the inventory ratio important 
the inventory turnover ratio shows how efficiently a company sells its inventory a relatively low ratio compared to industry peers indicates a risk that inventory levels are excessively high while a relatively high ratio may indicate inadequate inventory levels the bottom lineworking capital management is at the core of operating a business without sufficient capital on hand a company is unable to pay its bills process its payroll or invest in its growth companies can better understand their working capital structure by analyzing liquidity ratios and ensuring their short term cash needs are always met 