Inventory to Sales
Why it matters
Inventory to Sales bears a striking similarity to Inventory Turnover, but is more overt in the connection it draws between your Inventory levels and the Sales that you are making. By viewing your Inventory levels relative to your Sales you can identify swiftly when you Sales have fallen – and thus when the replenishing or production of stock needs to be lowered – or when you are over-ordering or over-producing items, leading to higher than desired Inventory levels. Unlike Inventory Turnover, a low Inventory to Sales ratio or percentage is desired.