Which statement accurately describes "inventory turns" as a performance measure?

The accurate description of "inventory turns" as a performance measure is that it indicates how many times a company's inventory is sold and replaced over a specific period, typically a year. This metric is crucial for evaluating the efficiency of inventory management. By expressing inventory turns as a ratio, it reflects how well a business converts its inventory into sales. A higher ratio suggests that inventory is being managed effectively and can indicate strong demand or efficient production processes.

The statement about inventory turns being the ratio of average inventory to total sales value in reality misrepresents the measure. Instead, inventory turns are derived from dividing the cost of goods sold (COGS) by the average inventory. This allows businesses to assess how frequently they replenish their stock in relation to sales made over time. It provides insights into inventory management efficiency, highlighting whether a business is holding too much inventory or not enough to meet customer demand.

The other options do not accurately define inventory turns. For instance, addressing the obsolescence of inventory, how stock levels relate to demand, and the specific time frame for averaging do not encapsulate the essence of inventory turns as a performance metric, which fundamentally focuses on sales efficiency relative to inventory levels.