Inventory Carrying Cost Formula: A Practical Guide

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The inventory carrying cost formula is Annual Holding Costs ÷ Average Inventory Value, and for most operators it runs 20% to 30% per year. That means a $500,000 stock balance burns about $100,000 to $150,000 a year just to sit there. If you're trying to answer one question, it's this, how much cash is inventory […]