What is Stock to sales ratio?

For a small Shopify store, this ratio tells you if your cash is sitting on a shelf or moving through the till. A high ratio means you have a lot of stock relative to what you sell, which ties up money and raises the risk of markdowns. A low ratio can mean you are underbuying and risking stockouts.

Use it by product category or by SKU, not just store-wide. A store average can hide the fact that candles are overstocked while apparel is running low. Check the ratio monthly so you catch drift before it becomes a cash flow problem.

Formula

Example

A candle shop has $6,000 of inventory on hand at the end of March and sold $3,000 of candles in March. The stock to sales ratio is 6000 / 3000 = 2.0. This means they are holding twice as much stock as they sold that month, which is fine if sales are about to pick up, but worth watching if sales stay flat.

Common mistakes

• Comparing ratios across very different product categories without adjusting for how fast each one sells.
• Using cost value for inventory but retail value for sales, which skews the ratio.
• Looking at the store-wide number only and missing slow-moving SKUs hidden inside it.

Stock to sales ratio and SteadyShelf

SteadyShelf forecasts sales per variant so you can see which SKUs are pushing your stock to sales ratio too high before you place the next purchase order.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

Related terms

Inventory to sales ratio · Days inventory outstanding · Sell-through rate · Weeks of supply · Inventory turnover

Full inventory glossary

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