Retail Inventory Method

Inventory control is an essential part of running a small business. Knowing how much inventory you have and how much it’s worth allows business owners to buy only the quantity of merchandise they need, avoiding overstocking and wasting stock. The retail inventory method is a popular method for managing inventory. In this article, we’ll go over what the retail inventory method is, how it works, and why it’s a good tool for a small business.

What Is It?

It is an accounting tool used to determine the value of your store’s items. It connects the cost of goods to the sale price of commodities. This information is valuable since it helps business owners determine if they should buy more of a product or if, in the future, they should buy less. It can also influence investing decisions for business owners. The method is used for businesses where one retailer buys products from another merchant and re-sells the products to consumers.

How to Calculate

To calculate, you will need a few pieces of information. First, you will need the cost-to-retail ratio of your products. This usually involves the price of your product and how much you paid for them. To calculate this, you will need to simply divide the cost of your product by its price (price you are selling it for) and multiply by 100. Next, you will need the cost of available goods. You will need to know how much the product costs you so that you can buy the products for your store. You can calculate this value by multiplying the cost of the initial item by the price of additional purchases. Then, you will need to calculate your cost of sales. You can get this value by multiplying the total sum of your sales revenue by your cost-to-retail ratio calculated earlier. This value is the profit you make from selling your products. Once you have this information, you can obtain the value by subtracting your inventory’s total cost from your sales price.

Why is it Used?

It is used because it is a simple and easy way to determine your goods’ worth. It’s useful for companies with many locations and warehouses buying items from a wholesaler and selling them directly to customers. Understanding the value of your stock is critical for determining pricing, purchasing, selling, and management decisions.

Point of Sale System

The National Retail Solutions Point of Sale (POS) system is an extremely useful tool for inventory management. The point-of-sale (POS) is a sophisticated payment system that streamlines and simplifies customer checkout. One of the system’s impressive features is inventory tracking. Using the tracking software, you can see what’s in your storage space and what’s left on the shelves. The system can even send you an alert when your stock is running low. This enables easy inventory management for small businesses and can make their jobs and lives easier. Visit for more information on the National Retail Solutions Point of Sale system.

Start with NRS today!

Don’t fall behind by missing out on all that modern POS systems can do for your small business. Contact NRS today at (833)-289-2767 or [email protected] to learn more about how modern ingenuity and resources can help you maximize profits.