Can shrinkage be negative?

Yes, and it is not good news. Counting more than the books say means the records are wrong in the other direction — goods received twice, a sale voided without the stock going back, a count that included a neighbouring bin. Negative shrinkage is the same defect as positive shrinkage with the sign flipped, and it usually travels with a positive figure somewhere else in the same warehouse.

At cost, if the question is what it did to the accounts, because that is what leaves the balance sheet. At retail value if the question is what it did to the year's sales, since that is the revenue that will never happen. The two differ by the whole gross margin, so a business quoting shrinkage at retail and comparing it to a benchmark quoted at cost will look far worse than it is. Say which one you mean.

The Count Says 48,200 and the Books Say 50,000

Published 9/22/2026 · 3 min read · Business tools

Camille Laurent — Finance writer at OneKitly

Tax · Personal finance

Checked against 2 sources

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In short

Shrinkage is the difference between the inventory the records say you have and the inventory a physical count finds, expressed against the book value. Fifty thousand on the books and 48,200 counted is a gap of 1,800 and a rate of 3.6 %. Both numbers matter and they are used by different people: the percentage is what benchmarks against last year and against other sites, and the absolute figure is what justifies spending money to fix it. A 3.6 % rate sounds tolerable until it is read as 1,800 gone in one count — and if that count covers a quarter, the annual figure is four times larger than the one anyone is looking at. Retail shrinkage in most published surveys sits around one to two per cent, so 3.6 % is not a rounding artefact; it is a signal that something specific is happening.

A gap of 1,800 is a shrinkage rate of 3.6 %. The percentage is the number that travels; the absolute figure is the one that pays for the fix.

Most shrinkage is not theft

The word suggests shoplifting, and the biggest single cause is usually paperwork. Goods received but never booked in, returns credited twice, units sold under the wrong code, damaged stock written off in the aisle and never in the system, supplier deliveries short of what the note claimed — each leaves the same footprint as theft and none of them is. The practical test is whether the gap is concentrated in a few high-value lines, which points at loss, or spread thinly across the whole range, which points at process.

A rate needs a period to mean anything

This calculator compares two figures at one moment and returns the gap between them; it does not know whether they are a month apart or a year. Comparing a rate from a quarterly count with an industry benchmark quoted annually understates the problem fourfold, and comparing an annual count with a monthly one does the reverse. Write the period next to the rate every time — a shrinkage figure without one is not comparable to anything, including itself last time.

The same gap, read three ways
Reading	Figure
Book value	50,000
Counted	48,200
Shrinkage	1,800 — 3.6 %

Worked with our own calculator

Inventory shrinkage calculator

Given

Recorded stock value ({cur}): 5,000
Physically counted value ({cur}): 4,750

Result

Shrinkage (%): 5%
Value lost: $250.00

These figures are produced by the calculator below, not typed in by hand — they are recomputed whenever the tool changes.

Run it on your own figures →

Frequently asked questions

Can shrinkage be negative?: Yes, and it is not good news. Counting more than the books say means the records are wrong in the other direction — goods received twice, a sale voided without the stock going back, a count that included a neighbouring bin. Negative shrinkage is the same defect as positive shrinkage with the sign flipped, and it usually travels with a positive figure somewhere else in the same warehouse.
At value or at cost?: At cost, if the question is what it did to the accounts, because that is what leaves the balance sheet. At retail value if the question is what it did to the year's sales, since that is the revenue that will never happen. The two differ by the whole gross margin, so a business quoting shrinkage at retail and comparing it to a benchmark quoted at cost will look far worse than it is. Say which one you mean.

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Sources

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