This Glenland Credit calculator, from Superior, Wisconsin, prices the financing part of holding stock from the numbers you enter. Treat the output as math on your own inputs; any actual rate or term is set by a funding partner.
Inventory Turns Calculator: How Superior, WI Retailers Use It
Inventory turns tell you how many times a year the stock sells through: cost of goods sold for the year divided by the average inventory at cost. A store with $240,000 of cost of goods sold and an average of $60,000 on hand turns 4 times a year, about every 91 days (365 divided by 4, our arithmetic).
The calculator here does not compute turns; it prices the financing. Use the turns to choose the months: stock that turns every 91 days sits about three months.
Reading Inventory Holding Cost Calculator Results as One of the Superior, WI Tavern Owners
A tavern's stock turns over sooner than a store's: kegs and liquor sell through in weeks, so the financing cost of bar stock is small. Enter the order amount, a rate from an offer and one or two months, and the interest comes out low; the larger holding cost for a bar is often shrink and spoilage, which the calculator leaves out.
A bar that buys a large order to lock in a distributor discount should run the calculator twice: once at the normal order size and once at the larger one. If the discount saves more than the added holding cost, the larger order pays; if the stock sits through a slow month, it may not.
Reading Inventory Holding Cost Calculator Results as One of the Superior, WI Gas Station Owners
A gas station's store stock turns at different speeds: drinks and snacks in days, auto supplies and seasonal goods in months. Run the calculator separately for the slow lines, since that is where holding cost builds. Fuel runs on supplier terms and is better left out.
Seasonal lines such as antifreeze, wiper blades or ice melt can sit for most of a year. Their holding cost, carried month after month, can swallow the margin, which is why many stores order them in two smaller rounds.
Inventory financing explains how lenders advance against store stock.
Limits of the Inventory Holding Cost Calculator
- It assumes a fixed rate and level monthly payments; many lines are variable or interest-only.
- It does not include fees, storage, insurance, shrink or spoilage.
- It does not compute turns or days on hand; those are worked by hand on this page.
- Its result is illustrative arithmetic, not an offer.
Holding Cost Worked by Hand: An Invented Cooler of Kegs at a Superior, WI Tavern
Illustration only, invented figures: a tavern finances $18,000 of kegs, liquor and mixers for a busy stretch and expects to sell through over 4 months at an invented annual rate of 10%. The calculator shows about $4,594 a month and about $377 in interest (our arithmetic).
Invented figures continued: add $120 a month for walk-in cooler space and power ($480 over 4 months), 1.5% shrink ($270) and $35 a month of added insurance ($140). The holding cost comes to about $1,267, or 7.0% of the stock's cost (our arithmetic).
Carrying Rate, Turns and Days on Hand Without the Jargon
The carrying rate is the holding cost for a year divided by the average inventory value. If carrying a $60,000 average inventory costs $12,000 a year in interest, storage, insurance and shrink, the carrying rate is 20% (our arithmetic).
Days on hand is 365 divided by turns: 4 turns means about 91 days. Multiply the carrying rate by days on hand over 365 to get the holding cost per dollar of stock for one cycle: 20% times 91 over 365 is about 5% (our arithmetic).
Business term loans covers larger purchases, and the request form starts a conversation about stock funding.
By Glenland Credit · Updated
