Stock-to-Sales Ratio Calculator
Inventory on hand at the start of a month relative to sales for that month.
Signals whether you have the right amount of stock for upcoming demand. Too high = markdowns; too low = stockouts.
- Formula
- BOM Inventory ÷ Sales for the Month
- Benchmark
- Monthly, with stock and sales both valued at retail. Department-store apparel typically plans 4:1 to 6:1; leaner specialty and fast-fashion operations plan 2:1 to 3:1
Worked example
- BOM inventory
- 100,000 SAR
- Monthly sales
- 25,000 SAR
- Result
- 4.00 : 1
How to read it
Stock-to-sales compares what you are holding at the start of the month with what you expect to sell during it. A result of 4.00 means four riyals of stock for every riyal of sales. It is a planning ratio rather than a performance one: it tells you whether the opening position is sized for the month ahead, before the month happens.
Common mistake
Using it only as a report. Last year's actual ratios are where the plan comes from, but the ratio earns its keep as a forward check — this month's opening stock against the sales you plan for the month ahead — so you can act while there is still time. The second trap is comparing the ratio across months of very different volume; a high ratio in a quiet month can be entirely correct if the next month is a peak.
What to do about it
A ratio well above the category norm means the month opens overstocked, and the lever is the intake schedule rather than the price — pull deliveries later before you plan a markdown you may not need. A ratio well below it means you are opening thin, which only matters if replenishment cannot reach you in time. Check the lead time before placing an emergency order at a worse cost price.
Questions
What is a normal stock-to-sales ratio?
Department-store apparel commonly plans 4:1 to 6:1, and leaner specialty and fast-fashion operations 2:1 to 3:1, rising ahead of peak months and falling after them. The useful comparison is against the same month last year rather than a flat annual benchmark.
Is a lower ratio always better?
No. Opening thin in a month you are about to trade hard means missing sales you have already paid to attract. The ratio should be sized for the month ahead, not minimised.
How is this different from weeks of supply?
Stock-to-sales is a value ratio across a month; weeks of supply is a unit measure across however long the stock lasts. Merchandise planning uses the first, replenishment uses the second. They convert: a monthly stock-to-sales ratio times 4.33 is the equivalent weeks of supply. So 4:1 is about 17 weeks of cover and 6:1 about 26, while 2:1 is about 9 weeks and 3:1 about 13. That is why a specialty retailer targeting 8–12 weeks plans nearer 2:1 than 4:1 — the two measures agree once you know which kind of shop the number came from.