To calculate your inventory to sales ratio, you'll need your average inventory for the period you're tracking and your net sales. You can find the latter by subtracting any sales returns from your gross (or total) sales. To find the inventory to sales ratio, simply divide your average inventory by your net sales.

What are the 4 types of inventory?

There are four main types of inventory: raw materials/components, WIP, finished goods and MRO.

What is a good ratio of inventory to sales?

A good inventory turnover ratio is between 5 and 10 for most industries, which indicates that you sell and restock your inventory every 1-2 months. This ratio strikes a good balance between having enough inventory on hand and not having to reorder too frequently.