Inventory management has become a critical determinant of organizational efficiency and financial performance in modern business environments. Effective inventory control enables firms to maintain an optimal balance between product availability and cost minimization while improving profitability and liquidity. This study examines the impact of inventory management efficiency on firm performance through a comparative analysis of selected manufacturing and retail firms in India. The research focuses on three manufacturing companies—Asian Paints, Hindustan Unilever Limited (HUL), and ITC Limited—and three retail companies—Aditya Birla Fashion and Retail Limited (ABFRL), Trent Limited, and Nykaa. Secondary data were collected from annual reports and financial statements covering the period from 2020–2021 to 2024–2025. Inventory Turnover Ratio (ITR), Days Inventory Outstanding (DIO), Return on Assets (ROA), and Current Ratio were used as key performance indicators. Descriptive statistics, correlation analysis, regression analysis, and independent sample t-tests were employed to evaluate the relationship between inventory efficiency and financial performance. The findings reveal that firms with higher inventory turnover generally demonstrate better profitability and liquidity. Manufacturing firms exhibited stronger inventory control and profitability compared to retail firms, although statistical analysis indicated no significant difference between sectors. The study concludes that inventory management is a strategic function that contributes significantly to operational efficiency, profitability, and sustainable business growth.