Working capital locked in current inventory and opportunity cost.
Inputs
Cost of goods sold per month
What cash earns elsewhere
Results
Cash tied up—
Days of cover
—
Inv as % of revenue
—
Annual opp cost
—
If you reduced to target days-of-cover
Target
Inventory Value
Cash Freed
Annual Opp Saved
About this calculator
Inventory is one of the most-overlooked drains on working capital in ecommerce. Operators see "$120K of inventory" on a balance sheet and treat it as an asset — which it is, but it\'s an asset that earns nothing while sitting on shelves. The opportunity cost compounds because that cash, if redeployed into paid acquisition or product development, would be working.
This calculator quantifies two things: the absolute dollars locked in inventory (cash tied up), and the days-of-cover that inventory represents at current sales velocity. Days-of-cover = Inventory ÷ Daily COGS. 30-60 days is healthy for most DTC; over 90 days suggests over-stocking; under 30 days suggests stockout risk.
The opportunity cost calculation puts a dollar figure on excess inventory. If you have $50K of "extra" inventory beyond 60-day cover, and your alternative use of cash would earn 12% APR (typical paid-ads ROI on incremental spend), that\'s $6K/year of foregone return — the cost of carrying that excess stock that doesn\'t show up in any P&L line item.
Pair with the Inventory Turnover Rate calculator, the Reorder Point calculator, and the MOQ vs Cash Flow Modeler for full inventory planning. The pattern most DTC operators discover: their average days-of-cover is 30-50% higher than they thought, and freeing 15-30% of working capital is achievable through better demand forecasting alone.
Frequently asked questions
How much inventory should I hold?
30-60 days of cover is healthy for most DTC. Below 30 days you risk stockouts; above 90 days you're tying up cash unnecessarily. Apparel/seasonal can spike to 120+ days during pre-season builds. Subscription brands hold less because demand is predictable.
What's opportunity cost?
Cash tied up in inventory can't be deployed elsewhere — into ads, hiring, or product development. The opportunity cost is what that money would earn at the next-best use. For most DTC: 8-15% annual return is what reinvested cash earns through paid ads, so excess inventory has that as the implicit cost.
How does this differ from inventory turnover?
Turnover measures cycle speed (annual COGS / avg inventory). Cash-tied-up measures the dollar amount of working capital locked in goods. They're related: low turnover = large inventory cash position; high turnover = leaner working capital.
When is high inventory justified?
Pre-BFCM/holiday builds (need to absorb 6-8 weeks of stock for peak), MOQ constraints (suppliers require 1000-unit minimums even if you only sell 200/month), or when supplier lead times are long enough that running lean creates stockout risk.
What's the inventory-to-revenue ratio?
Annual inventory value / annual revenue. Healthy DTC: 8-15%. Above 20% you're likely over-stocked; below 5% you're running too lean and probably losing sales to stockouts. Apparel ranges 15-25% due to size/color SKU spread; commodity brands run 5-10%.