A measure, usually expressed as a percentage, of the costs incurred to hold inventory as a result of the cost of the item itself, insurance, obsolescence, theft, damage, use of storage facilities and other causes.
The cost of the capital employed in holding an asset (such as inventory) calculated as an interest rate (internal borrowing rate or opportunity cost of capital) times the amount of capital employed.
The interest expense incurred in financing an inventory of securities. It is considered “negative carry” when the cost incurred in borrowing to finance the holding of securities exceeds the income from the securities and “positive carry” when the yield of the securities is in excess of the interest cost of the funds borrowed to finance the holding of the securities.
Also called holding cost, carrying cost is the cost associated with having inventory on-hand. It primarily refers to the costs associated with the inventory investment, plus any storage costs. If the cost does not change based upon the quantity of inventory on-hand it should not be included in the carrying cost. Carrying cost is represented as the annual cost per average on-hand inventory unit.