# Wholesale Inventories-to-Sales Ratio at 7 Year Lows

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Last modified: 2021-09-12

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By Paul Ebeling · 2021-09-12
Tags: money, demand, sales, inventory, Paul Ebeling, wholesale, Knightsbridge Insights, 2021
Signed: no (published before platform launch).
Nothing in this article is investment advice.

#inventory #money #demand #sales

"*Inventory turnover ratio, inventory-to-sales ratio, and sell-through rate are the 3 most useful inventory metrics for retail businesses*"--Paul Ebeling

US wholesale inventory accumulation slowed in July, lagging behind sales, and it is now taking wholesalers the shortest time in 7 yrs to clear shelves.

Retail is a money machine where you turn capital into inventory, and inventory into sales. The more times this machine runs, the more profit are generated.

The inventory-to-sales ratio works in the opposite direction to the inventory turnover ratio, so a lower number is better.

Overall, businesses want to keep their inventory-to-sales ratio as low as possible. A low ratio results in higher profit margins and lower operational risks – if something goes wrong, the potential losses are much lower when you are carrying less inventory. But, a practical approach needs to be taken to allow for supply constraints and spikes in demand like now.

Have a prosperous weekend, Keep the Faith!

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