![]() The simplest method is to add the beginning-of-year stock to the end-of-year stock and then divide it by two: (beginning-of-year stock + end-of-year stock) ÷ 2.There are two main ways to calculate the average stock value: If you use an inventory management software, you can easily have it calculated. The average stock corresponds to the average value of a company's stocks over a given period (a month, a quarter, a semester, a year, etc.). If you purchase products to resell, use the 'Cost of Goods Purchased'.If you manufacture the products you sell, use the 'Cost of Goods Sold', which includes expenses related to raw materials, labor, and depreciation.Boost sales of flagship products: When the inventory turnover ratio is associated with an inventory and sales management software, it becomes a valuable tool to identify your best-selling items with unprecedented precision.Failing to calculate your inventory turnover ratio may leave you with cash frozen in unsold products. Keep merchandise in motion: This is particularly important for distributors and wholesale companies selling perishable goods, such as food items.By identifying high-turnover products, you can orient your purchasing policy and adjust production and supply strategies. To minimize storage duration, it is crucial to measure the average time products stay in your warehouse before they are shipped to customers. Make smarter purchasing decisions: Products that linger in your warehouse generate no profit.It is, therefore, a vital indicator for maintaining a balance between supply and demand while minimizing storage-related costs.īy calculating your inventory turnover ratio, you can improve three important aspects for your business: Through inventory turnover, you gauge the efficiency of your inventory management by assessing how often products are sold or used. Conversely, a low ratio can lead to issues of expiration or overstocking. ![]() A high turnover ratio indicates that stocks are replenished quickly, indicating good collaboration with suppliers and an effective response to customer demand.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |