Shrinkage & Wastage Calculator

Quantify the profit impact of inventory shrinkage from theft, damage, spoilage and administrative errors — and calculate the extra sales needed to recover those losses.

Result

Metric	Calculation	Value

Notes & assumptions: Expected closing stock = opening + purchases − COGS. Shrinkage = expected − actual closing. Recovery sales = shrinkage loss / gross margin.

Disclaimer: This tool provides an indicative estimate for general planning only and is not professional, legal, financial, medical or engineering advice. Reference values are editable defaults that vary by location, vendor, regulation and date. Verify critical figures with a qualified professional. Varada Nexus accepts no liability for decisions made using this tool.

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FAQ

What is a normal shrinkage rate?

Retail industry average is 1.4–2% of sales. Grocery/food: 2–4% (spoilage). Electronics: 0.5–1%. Above 2% warrants investigation into theft, process failures or supplier short-shipments.

How do I reduce shrinkage?

Implement cycle counting, CCTV surveillance, staff background verification, two-person rules for inventory, supplier invoice reconciliation, and ERP-based real-time stock tracking.

Is shrinkage tax deductible?

Stock loss/shrinkage is deductible as a business expense under Income Tax Act when it is normal/expected loss. Abnormal loss (theft/fraud) requires police report and management approval for deduction.