Inventory Control & Working Capital Management

Stock Ageing & Inventory Carrying Cost Calculator

Evaluate slow-moving and dead stock across standardized ageing slabs. Calculate your total annual carrying cost (Bank CC interest, warehouse rent, shrinkage & obsolescence), measure capital locked in non-moving items, and simulate clearance discount markdowns to unlock immediate cash flow.

Industry Presets

1. Inventory Ageing Slabs

Enter the purchase cost / book value of inventory in each age bracket.

Fresh Stock (0–30 Days) (₹)

₹

Normal Turnover (31–60 Days) (₹)

₹

Slow-Moving Warning (61–90 Days) (₹)

₹

Stagnant Stock (91–180 Days) (₹)

₹

Dead / Obsolete Stock (>180 Days) (₹)

₹

2. Annual Carrying Cost Breakdown

Cost of holding stock: bank interest, godown rent, and shrinkage.

Cost of Capital / Bank CC Rate (%)

Interest rate on bank cash credit, working capital loan, or overdraft (typically 10-14%).

Storage & Warehousing Cost (%)

Godown rent, electricity, handling staff, and insurance as % of inventory value.

Obsolescence, Spoilage & Pilferage (%)

Annual loss from expiry, breakage, theft, and price erosion.

3. Clearance Markdown Simulator

Analyze cash recovery and carrying cost savings from liquidating old stock.

Proposed Clearance Discount (%)

Markdown offered on stagnant and dead stock to accelerate liquidation.

Annual Cost of Goods Sold (COGS) (Optional) (₹)

₹

Used to compute Inventory Turnover Ratio and Days Sales of Inventory (DSI).

Stock Ageing & Cost Analysis

Total Annual Holding Bleed₹3,80,000.00

Total Inventory Value: ₹20,00,000.00
At-Risk Stock (>60 Days): ₹7,00,000.00 (35%)
Dead Stock (>180 Days): ₹1,50,000.00 (7.5%)
Annual Bleed from At-Risk Stock: ₹1,33,000.00 / year

Monthly Carrying Cost:₹31,666.67 / month

Total Annual Carrying Cost Rate:19% p.a.

Inventory Turnover Ratio:5x (73 days DSI)

How it works

Stock ageing analysis categorizes inventory into aging duration tiers to pinpoint dormant working capital and prevent obsolescence losses. In commercial practice, holding unsold inventory is not free; it incurs a continuous 'Carrying Cost' (Holding Cost) typically ranging between 18% and 25% per annum in India. Carrying cost comprises three pillars: (1) Cost of Capital (interest paid on Bank Cash Credit/Overdraft facilities or opportunity cost of equity, typically 10–14% p.a.), (2) Storage & Warehousing Cost (godown rent, electricity, air-conditioning, insurance, and labor handling, 3–6% p.a.), and (3) Obsolescence & Shrinkage Risk (breakage, pilferage, expiration, style obsolescence, and price erosion, 3–7% p.a.). Stock older than 60–90 days rapidly erodes operating margins. For stagnant (91–180 days) and dead stock (>180 days), holding on in hopes of full-price realization is often mathematically irrational: paying 19% carrying cost for 12 months consumes more money than offering an immediate 15–20% clearance markdown. This calculator computes weighted average stock age, separates healthy turnover from dormant capital, quantifies monthly financial bleed, and provides a break-even clearance markdown model.

Example

A textile merchant in Surat holds ₹20,00,000 in warehouse inventory: ₹8,00,000 fresh (0–30 days), ₹5,00,000 normal (31–60 days), ₹3,00,000 slow-moving (61–90 days), ₹2,50,000 stagnant (91–180 days), and ₹1,50,000 dead stock (>180 days). At an annual carrying cost of 19% (11.5% Bank CC interest + 4% warehouse rent + 3.5% fashion obsolescence), total holding cost is ₹3,80,000 per year (₹31,667 per month). The ₹4,00,000 locked in stagnant and dead stock alone bleeds ₹76,000 annually. Offering a 20% clearance markdown (₹80,000) recovers ₹3,20,000 in immediate liquid cash, saving ₹76,000 in annual carrying costs—meaning holding for just 12.6 months would destroy more value than the entire discount offered today.

Frequently asked questions

What are the standard inventory ageing slabs used by Indian businesses?

Indian wholesalers, retailers, and MSMEs commonly track inventory across five slabs: 0–30 days (Fresh / Fast-Moving), 31–60 days (Normal Turnover), 61–90 days (Slow-Moving Warning), 91–180 days (Stagnant Stock), and >180 days (Dead / Obsolete Stock requiring clearance).

What is Inventory Carrying Cost and why is it so high in India?

Carrying cost is the total financial expense of holding unsold goods over a year. In India, bank Cash Credit (CC) and Working Capital loans carry 10%–14% interest rates. Combined with warehouse rent, electricity, insurance, material handling, damage, and theft, holding costs usually total 18%–25% of stock value annually.

Why is it mathematically better to sell dead stock at a discount?

Holding dead stock incurs ongoing financing and storage costs every single month. If your carrying cost is 20% per year, holding a ₹1,00,000 item for 18 months costs ₹30,000 in cash bleed. Selling it today at a 20% discount (₹80,000) recovers ₹80,000 immediately to reinvest in fast-selling goods and stops the financial bleed immediately.

How does stock ageing connect to Days Sales of Inventory (DSI)?

Days Sales of Inventory (DSI) measures the average number of days it takes for a company to turn its inventory into sales. High DSI indicates capital tied up in slow-moving stock, while a low DSI reflects high inventory turnover and superior liquidity.