Small-business finance
Inventory carrying cost
Price the annual cash burden of holding a specified inventory balance.
Your inputs
Complete the fields for your selected method. Zero means intentionally zero, not unknown. Currency selection labels amounts; it does not convert exchange rates.
How this calculation works
average inventory*carrying rate+explicit fixed storage costs.
Carrying rate must exclude fixed storage entered separately. This is an economic burden estimate; not every carrying component is a cash payment. No purchasing or supplier comparison.
What information do I need?
Use records for the same job, equipment or accounting period. Only the fields for your selected entry method are required. An unknown amount is not zero.
Input definitions and where to find them
- Average inventory value (selected currency): Use matching records or a clearly identified owner assumption for average inventory value, in the displayed unit and the stated row/period scope.
- Annual variable carrying rate (%): Explicit annual variable carrying-cost rate from actual components or an owner assumption; fixed storage excluded.
- Additional annual fixed storage cost (selected currency): Matching invoice, quote, statement, bookkeeping record or explicit budget amount for additional annual fixed storage cost. Use the stated period and exclude amounts already counted in another field. Zero means intentionally excluded/not incurred, not unknown.
Use the Where to find this value controls beside the inputs for available work-it-out helpers. Estimates remain your assumptions; a helper does not verify the source figures.
Worked example
Example amounts use US dollars (USD).
Example answer: Annual inventory carrying cost is $25,000.00 for the illustrative inputs below.
Example inputs
- Average inventory value: $100,000.00
- Annual variable carrying rate: 20.00 %
- Additional annual fixed storage cost: $5,000.00
- Annual inventory carrying cost
- $25,000.00
- Variable annual carrying burden
- $20,000.00
These illustrative values are not recommended rates or industry averages. Replace every example input with your own figures.
Use the result well
Price the annual cash burden of holding a specified inventory balance.
Keep inputs on the same scope and time basis. Calculations retain precision internally; displayed values generally round to two decimal places, with extra precision for very small values and whole-unit rounding where required. Economic comparisons describe your supplied assumptions and do not guarantee future results.
This tool provides business arithmetic. It does not approve engineering designs, establish legal or tax treatment, select equipment or certify safe operating conditions.