Business Glossary
What Is Stock Cover?
Stock cover measures how many days of sales you can fulfil from current stock. Too little means stockouts and lost sales. Too much ties up cash unnecessarily. Getting stock cover right is a core working capital discipline.
The Formula
Stock Cover (days) = Stock Value ÷ (Annual COGS ÷ 365)
Worked Example — UK SME
A UK retailer holds £42,000 of stock. Annual COGS = £280,000. Daily COGS = £767. Stock cover = 42,000 ÷ 767 = 54.7 days.
UK Benchmark
📊 Optimal cover by sector: FMCG 14–28 days, general retail 30–60 days, distribution 45–90 days, manufacturing 60–120 days. The goal is minimum cover that eliminates stockouts on key lines.
Common Questions
What happens if stock cover is too low?
Stockouts on best-selling lines lose revenue and damage customer relationships. UK SMEs lose 4–8% of revenue annually to stockouts on replenishable lines.
What happens if stock cover is too high?
Excess stock ties up cash, risks obsolescence, and increases warehouse costs. Carrying 90 days when 45 would suffice unnecessarily ties up 1–3 months of working capital.
How do I calculate reorder point?
Reorder point = (Average daily sales × Lead time) + Safety stock. For 15 units/day, 12-day lead time, 3 days safety stock: reorder at 225 units.
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