Inventory to Sales Ratio

Problem

High inventory levels compared to sales, indicating potential overstock situation and difficulty selling through inventory.

Insight

By evaluating the inventory to sales ratio over time and comparing it to average inventory and net sales, Lumi identifies discrepancies between stock levels and sales performance, highlighting inefficiencies in inventory management. The chart view further highlights that the increase in inventory to sales ratio is driven by high inventory levels, showing that the problem in having large amounts of unsold inventory at the store.

‍Impact

Understanding the inventory to sales ratio helps the business understand its inventory position and whether its making enough sales or possibly not stocking enough inventory. These insights can help the business optimize inventory levels and reduce excess stock, freeing up working capital and improving cash flow management. By aligning inventory more closely with its sales trends, a business can reduce holding costs and increase operational efficiency.