concept of turnover in the economy occurs often.One of the most frequently analyzed economic performance is the inventory turnover.
Inventories - less liquid short-term assets, so they are subject to risks, which are not subject to other current assets.Stocks are frozen funds, because they are the money that the company does not use.The vast majority of organizations trying to avoid large inventories with low turnover.The best way - to have enough available funds obtained by accelerating the turnover.
Excess inventories often lead to unnecessary costs and reduce profits.All stocks are constantly changing value, so their characteristics are calculated the average stock of goods.It is defined in terms of value and volume terms;in general, and for various product groups.
Inventory turnover is of several types:
- each item in real terms (volume, pieces, weight);
- every single name of value;
- together names or common stock in real terms;
- set of headings or the total stock at cost.
characterized Inventory turnover ratio of turnover.This indicator shows the number of revolutions of the average balance of goods for a certain (reporting) period.This ratio can be calculated using various parameters and for different time periods, for a set of names or positions of the goods.Often, the turnover ratio is called simply "inventory turnover".The most popular formula for calculating turnover ratio:
- factor inventory cost = cost of goods sold for a certain period / average investment in inventory.
- factor inventory in kind = number of sold goods for a certain period / average for the period, the number of inventory.
- Factor of position value = ratio of the total value of all sold items over a certain period of the position / average for this period investment in stocks at that position.
For the calculation of this indicator is necessary to determine: the average stock of goods, and trade for a certain period, the settlement period (week, quarter, month, year).Inventory turnover
one position in value and quantity yields the same result, and the set position by the number differs from that of the index value.The reciprocal of the turnover ratio is used to characterize the average balances of working capital per unit of sale of goods in quantity and value terms.As a rule, the average turnover of the funds in these days is the ratio of a certain period to turnover ratio (number of revolutions).The average duration of this turnover is called the "average commodity stocks in days."
period inventory turnover in days characterized by the rate of commodity circulation and the time of one revolution:
Inventory turnover in days = average inventory / cost of goods sold.
The work with indicators, consider the following important points:
- turnover is calculated only where there is a debit product is in stock;
- those that have not been capitalized and are written off from the warehouse in the calculations are not taken into account;
- not accounted for and sold products that are in stock and not shipped to the buyer;
- stocks and turnover should be calculated in the same quantities;
- analysis of inventory turnover should be carried out in dynamics;
- in every sector of the economy, the region, each species has its own rules of goods turnover.
There is a pattern: the higher the inventory turns, the less time they are in storage and will again turn into money.
