Balancing inventories is key to managing profitability and to avoiding fresh production cutbacks if demand continues to remain modest this year.

Data from Sageworks, a financial information company, shows that U.S. businesses are keeping their inventories in line with demand, with wholesalers, in particular, balancing their stockpiles from manufacturers and their sales to retailers.

Sageworks recently conducted a financial statement analysis of privately held wholesale merchants and found they’ve kept their inventory days steady despite sales growth. Private wholesalers, part of a $4 trillion sector that operates between manufacturing and retailing, in 2011 saw a second year in a row of double-digit sales growth as sales increased nearly 13 percent, according to Sageworks’ data. Sales had rebounded from a roughly 3 percent decline in 2009 to a nearly 11 percent increase during 2010. Across all industries, private-company sales rose about 7 percent last year.

Wholesalers’ inventory days, meanwhile, have stayed level at around 77 in 2009, 2010 and 2011, suggesting private suppliers are doing a good job of managing their stocks. Inventory days are calculated as inventories divided by cost of goods sold (COGS), multiplied by 365.

“The steadiness of wholesalers’ inventory days suggests that private wholesalers are doing a good job of managing inventories compared to their sales—they have a good sense of the demand they face now and will face in the near future,” said Sageworks analyst Libby Bierman. “This is especially true since inventory days remained stable even after the recession hit wholesalers.”

Data from the federal government on Tuesday also provided evidence of balanced business inventories. The U.S. Census Bureau reported manufacturers’ and trade inventories grew at a slower rate than their sales and shipments in December. Business inventories increased a seasonally adjusted 0.4 percent in December and were up 7.7 percent from a year earlier, compared with sales increases of 0.7 percent from November to December and 8.9 percent from a year earlier.

The total inventory-to-sales ratio ended the year at 1.26 on a seasonally adjusted basis, compared with 1.28 at the end of 2010, the government said. Manufacturers ended 2011 with a 1.33 inventory-to-sales ratio, down from 1.34 in November. Retailers and merchant wholesalers’ inventory relative to sales was unchanged from November, when it was 1.32 and 1.15, respectively.

Sageworks, a financial information company, collects and analyzes data on the performance of privately held companies and provides financial forecasting software.

For more information, visit: http://www.forbes.com/sites/sageworks/2012/02/15/wholesalers-balance-inventory-with-sales/