Calculating Average Inventory is an essential yet often overlooked business tool. It’s a simple concept that allows companies to understand their inventory balance over time, making it easier to make informed decisions. By looking at the average amount of inventory held by a company, businesses can more accurately estimate future needs and adjust purchasing accordingly. Calculating Average Inventory also serves as a crucial indicator of how quickly products flow in and out of a business, which helps companies gauge success in sales. It’s a powerful yet straightforward means of assessing a business’s trend-lines and tying supply to demand.