How is the inventory to sales ratio calculated in the app

Inventory to Sales Ratio is a financial metric that compares the amount of inventory a company holds to its sales over a specific period. This ratio helps businesses assess how well they are managing their inventory in relation to their sales volume.

Terms and formula

• SKU: Stock Keeping Unit, a unique identifier for your product variants.

• Inventory to sales ratio: how many times the amount of inventory a company holds per sale over a specific period

[Average Inventory Value] / [Net Sales]

• Average inventory value: the average value of inventory during the period.

( [Begingin Inventory Value] + [Ending Inventory Value] ) / 2

• Beginning inventory value: The initial inventory at the cost of a specified historical period.

• Ending inventory value: The inventory at cost at the end of a historical period.

• Net sales: the net revenue excluding refunds, shipping fees, and taxes.

Updated on: 11/02/2025