Investopedia

Continue to Site »

Shrinkage

Filed Under » , , , ,
Dictionary Says

Definition of 'Shrinkage'

The loss of inventory that can be attributed to factors including employee theft, shoplifting, administrative error, vendor fraud, damage in transit or in store and cashier errors that benefit the customer. Shrinkage is the difference between recorded and actual inventory. According to the National Retail Security Survey, conducted by the University of Florida, shrinkage in the United States during 2009 represented 1.44% of retail sales. This percentage amounts to billions of dollars in lost inventory each year for U.S. retailers. Security guards, security tags and cameras are used by retailers in an effort to reduce shrinkage.
Investopedia Says

Investopedia explains 'Shrinkage'

According to the 2009 National Retail Security Survey, employee theft is the biggest contributor to shrinkage, approximately 43%, though employees are much less likely to be caught and apprehended than are shoplifters. In addition, the dollar value of employee theft incidents tends to be higher than shoplifting incidents.

Articles Of Interest

  1.

    Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.

  2. Inventory Valuation For Investors: FIFO And LIFO

    We go over these methods of calculating this component of the balance sheet, and how the choice affects the bottom line.

  3. Understanding The Cash Conversion Cycle

    Find out how a simple calculation can help you uncover the most efficient companies.

  4. Identifying And Managing Business Risks

    There are a lot of risks associated with running a business, but there are an equal number of ways to prepare for and manage them.

  5. Consumer Spending As A Market Indicator

    What people buy and where they shop can provide valuable information about the economy.

  6. Depreciation: Straight-Line Vs. Double-Declining Methods

    Appreciate the different methods used to describe how book value is "used up".

  7. 7 Unconventional Ways Businesses Can Borrow Money

    Find out how your business can get the money it needs - even when the bank says "no".

  8. Financial Statement: Extraordinary Vs. Nonrecurring Items

    When it comes to analyzing a company, successful analysts spend considerable time differentiating between accounting items that are likely to recur going forward from those that most likely will ...

  9. Get A Career In Showbiz Accounting

    An accounting career doesn't have to be boring. If you love numbers, but want excitement as well, consider the field of showbiz accounting.

  10. Joh. A Benckiser Looks To Corner The Coffee Market

    Joh. A Benckiser is paying a huge price for the European coffee maker. What does this mean for the rest of the world's coffee manufacturers?
comments powered by Disqus
Marketplace
Hot Definitions

  1. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  2. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  3. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  4. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  5. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  6. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.
Trading Center