Inventory Health: The Complete Guide

“Inventory health” isn't one number — it's a handful of related metrics that, together, tell you where cash is trapped, what's still working, and what deserves attention first. This guide is the map connecting them.

Inventory aging

How long stock has sat since it arrived. Age alone isn't a verdict, but it's the cheapest signal to compute across every SKU, and it's the first filter for finding what deserves a closer look. See Inventory Aging Analysis and the free calculator.

Dead stock

Inventory that has effectively stopped selling. Unlike a slow mover, it usually needs a deliberate decision rather than more time. See Dead Stock Inventory: What It Is and How to Identify It and the free calculator.

Slow-moving inventory

Stock that's still selling, just too slowly to turn over in a reasonable time — often the largest category of trapped cash precisely because it doesn't look urgent. See Slow-Moving Inventory: How to Spot It and What to Do and the free calculator.

Sell-through rate

What share of received units have actually sold. Useful for spotting buying mistakes early, but only meaningful alongside its time period and category context. See the sell-through rate guide and the free calculator.

Cash tied up in inventory

The dollar figure behind every other metric on this page — how much of your cash is currently sitting on shelves rather than available for anything else. See the cash tied up guide and the free calculator.

Inventory turnover

How many times inventory is sold and replaced over a period (cost of goods sold ÷ average inventory). Higher isn't universally better — extremely high turnover can indicate understocking and missed sales just as low turnover indicates excess.

Carrying costs

The ongoing cost of holding inventory — storage, insurance, shrinkage, and the opportunity cost of the cash itself — typically expressed as a percentage of inventory value per year. It's the reason holding excess stock costs more than the sticker price of the goods alone.

Markdown economics

The math behind a proposed price cut: projected revenue if remaining units sell at the new price, gross margin at that price, and whether the price would fall below cost. A markdown decision should always be run through this math rather than a round-number instinct.

Gross margin and inventory velocity

Margin and velocity are the two inputs that ultimately decide what action makes sense for a given SKU — a low-margin, slow-moving item calls for a very different response than a high-margin one with the same sales pattern. Every metric above feeds into this decision.

How the pieces fit together

None of these metrics is complete on its own. Age without sales context can flag a healthy seasonal item. Sell-through without a time period is meaningless. Cash tied up without a materiality threshold buries the few SKUs that actually matter under thousands that don't. Inventory Assassin combines age, velocity, margin, and cash tied up into a single score per SKU, ranked across your entire catalog, with a specific recommended action for each priority item — the step that comes after diagnosing the problem one metric, and one product, at a time.