Correctly calculating inventory accuracy is essential to businesses of all types. 

Inaccurate inventory counts plague both retail and wholesale businesses. Consumer retailers have more frequent issues, though, because of the volume of products sold and returned, as well as expiring, restocked incorrectly and more.

What is Inventory Accuracy?

Inventory accuracy refers to any disparity that exists between your business's electronic records reflecting your inventory and your actual inventory.

Businesses need to regularly reconcile two inventory-related numbers:  

1. Electronic or paper records should be available inventory based on deliveries, sales and shipments
2. What’s actually counted in a physical check of the inventory on hand

This process - referred to as inventory accuracy cycle counting - helps expose errors before the discrepancies grow so large that fixing them becomes a major accounting and sales problem. 

How to Calculate Inventory Accuracy

Assuming all four of the data points are available and correct, the math behind calculating inventory accuracy looks like this:

• Determine the number of sampled inventory test items
• Determine the total number of all inventory items sampled
• Divide the number of sampled inventory test items by the number of all inventory items sampled