Can the inventory turnover ratio be too high?

Yes. A high ratio achieved through frequent stockouts is not efficiency. It is lost revenue hidden by lean stock. High turnover only signals health when service level holds at the target. Otherwise the company is converting inventory into missed sales and customer churn. This is why the ratio should always be read together with service level, lost sales estimates and expediting costs. Lean stock that triggers premium freight, production rescheduling or backorders often costs more than the working capital it appears to save, and the damage to customer trust shows up later in retention rather than in the current period's KPI.