Proper financial management directly depends on the effective use of working capital (in particular, finished product inventories). To control their use, it is important to calculate turnover - one of the main indicators of business activity. Let us recall that inventory turnover characterizes the possibility of obtaining a gross profit from one ruble invested in inventories at a stable markup, and shows the speed at which inventories are turned over for a certain period. The higher the company's inventory turnover, the more efficient production is and the lower the need for working capital to organize it.

To achieve a stable financial condition of the company, a certain turnover ratio is used, reflecting the number of days or turnovers for which the stock of goods must be sold, taking into account the fulfillment of the company’s strategic goals. This indicator is important for ensuring the financial efficiency of the product group - the optimal ratio of the turnover period and the level of margin.

Let us note the main types of inventory turnover:

• turnover of each item of material in quantitative terms (in pieces, by volume, weight, etc.);
• turnover of each item of material by cost;
• turnover of a set of items or the entire inventory in quantitative terms;
• turnover of a set of items or the entire inventory by value.

For us, the most relevant two indicators are the number of finished product inventory turnovers and turnover in days. Inventory turnover ratio(R) characterizes the rate of renewal of the company's reserves (the amount of turnover of funds invested in reserves during the reporting period) and is calculated using the formula:

About = V / W avg, (1)

where B is revenue from sales of products, goods, thousand rubles;
Z av - average cost of inventories, thousand rubles.

Turnover in days(About days) shows how many days on average the inventory turns over in the analyzed period, and is calculated using the formula:

where t r is the number of days.

The mechanism for rationing finished product inventory turnover consists of the following stages:

1. Development of a regulatory document - Regulations on the regulation of working capital turnover (hereinafter referred to as the Regulations), which should provide detailed methodological recommendations for determining the standards of turnover of working capital (in particular, stocks of raw materials and supplies), as well as information on the method of calculation and a list of those responsible for compliance with standards.
2. Conducting an express test to confirm the reliability of the data obtained on finished product inventory turnover standards. Testing of the proposed calculation methodology can be carried out once every six months if the calculation is carried out quarterly, and once every 2 years if the calculation is carried out annually. As a rule, testing of the proposed model for calculating the inventory turnover rate of raw materials and supplies occurs using a spreadsheet editor.
3. Introducing clarifications and adjustments to the Regulations in accordance with changes in the method of calculating standards and the data received.
4. Automation of relevant processes. This will increase the reliability of the received data and increase the speed of their processing. In addition, protection against both accidental and malicious distortions of information must be established.
5. Constant control. The inventory turnover rate of finished products should be regularly monitored in order to timely identify its negative dynamics and correct the situation.

Choosing a method for rationing inventory turnover of raw materials and supplies

When normalizing finished product inventory turnover, the following methods can be used:

• direct account;
• analytical;
• reporting and statistical;
• coefficient

FYI

The choice of one method or another directly depends on a number of factors - the data provided, the system and form of calculations, and the specifics of doing business.

Direct counting method is based on the actual need for inventory turnover of raw materials and supplies. Direct counting is used if it is possible to determine the duration of business processes included in the company’s operating cycle. Note that the direct counting method provides for a reasonable calculation of the turnover of inventories of raw materials and materials.

Analytical method The assessment of the turnover standard for inventories of raw materials and supplies is established based on the actual amount of working capital for a certain period with subsequent adjustment. The calculation of the standard is based on a detailed analysis of the turnover of raw materials and supplies.

Usage reporting and statistical method is based on the analysis of statistical (accounting or operational) reporting data on the actual turnover of inventories of raw materials and materials for previous periods (quarter, year).

With the coefficient method The working capital standard for the planned period is established using the standard of the previous period and taking into account adjustments for changes in production volume and for the acceleration of working capital turnover.

Quite often in practice the reporting and statistical method is used. Let's consider the order of its application.

The algorithm for calculating the inventory turnover ratio using the statistical method consists of the following steps:

1. Collection of the necessary information from the financial statements for a certain period (quarter, year) - data on actual inventories, revenue from sales of products and goods. For a more accurate calculation, it is advisable to present the data in dynamics.

2. Calculation of actual inventory turnover for each period. (About i). Here it is important to decide what turnover should be presented - in days or in revolutions, and depending on this, use formula (1) or (2).

3. Determination of the average value of inventory turnover of raw materials and supplies (About Wed ). The formula used for this is:

where Ob 1, Ob 2, Ob n- inventory turnover for i th period, vol.;
n- number of periods.

4. Determination of the finished product inventory turnover rate (Obn):

About n = About avg,

if the rule is met: as revenue increases, the stock of finished products decreases. (4)

For example, the Leader company, which produces low-voltage complete devices, decided to establish an annual inventory turnover standard for finished products. The calculations used both accounting and management reporting for the last five years (Table 1). Calculation of turnover is made according to formula (1). Thus, for low-voltage complete devices, the actual turnover over the years was:

2009: 198,000 / 18,900 = 10.48 rpm;

2010: 202,000 / 19,560 = 10.33 vol.;

2011: 200,500 / 22,300 = 8.99 rpm;

2012: 221,890 / 21,500 = 10.32 vol.;

2013: 200,560 / 22,345 = 8.98 rev.

Using formula (3) we find the average turnover of low-voltage complete devices:

(10.48 + 10.33 + 8.99 + 10.32 + 8.98) / 5 = 9.78 vol.;

and complete distribution devices:

(7.85 + 8.39 + 7.25 + 8.27 + 7.52) / 5 = 7.9 vol.

Next, we determine trends in changes in the turnover of finished products for each assortment item (increase/decrease) and compare them with the analyzed period (2014). Typically, as revenue increases, the stock of finished goods decreases. As we see (see Table 1), for the first assortment position in one period (2012/2011) an increase in revenue was accompanied by a decrease in finished product inventories, in another (2013/2012) the opposite was true. Therefore, if you choose the standard value of 9.78 in this case, you need to check whether rule (4) will be satisfied at this value. Thus, if in 2014 it is expected to increase revenue from the sale of low-voltage complete devices to 210,654 thousand rubles, then the need for inventories necessary to satisfy customer demand will be 21,539 thousand rubles. (RUB 210,654 thousand / 9.78). At the same time, a decrease in finished goods inventories by 3.61% will be accompanied by an increase in revenue by 5.03%, which is a positive result. This means that a turnover ratio of 9.78 can be used as a benchmark for a specific product group. The Leader company plans to install it for the next three years, which will make it possible to more accurately predict the required volume of finished product inventories in order to ensure timely order fulfillment. Similarly, the feasibility of establishing an average turnover ratio for the second assortment position is checked.

What if the activities of the Leader company are sensitive to seasonal fluctuations? In this case, when calculating the company's turnover rate, one should take into account the degree of seasonal fluctuation in sales levels for different periods (quarter, month).

Let's take a closer look at an example. Let's take the data in table as a basis. 1. We will present the average values ​​for 5 years broken down by quarter. Let’s assume that for timely delivery, the turnover of finished goods inventories per year is planned to be set at 8.5 vol. Let's determine the inventory turnover standard quarterly.

1. Calculation of the turnover ratio is carried out in the following sequence: Find the turnover of finished goods inventories for the period (in our example, a quarter) (Ob i) according to formula (1)

About 1 = 38,890 / 19,624 = 1.98 about;

About 2 = 56,150 / 21,780 = 2.58 about;

About 3 = 42,660 / 20,500 = 2.08 about;

About 4 = 66,890 / 21,780 = 3.07 about.

2. Determine the seasonality coefficient of the analyzed period (K season. i). For this purpose, turnover per quarter (Vol. i) divide by the average quarterly turnover value (Abv):

By sez. 1 = 1.98 / 2.445 = 0.81;

By sez. 2 = 2.58 / 2.445 = 1.05;

By sez. 3 = 2.08 / 2.445 = 0.85;

By sez. 4 = 3.07 / 2.445 = 1.26.

3. We determine the standard value of inventory turnover for the quarter (On n. i) as the ratio of the product of the seasonality coefficient of the analyzed period (To season. i) and the standard turnover ratio (Turn) for the year to the number of periods in the year:

The calculation results are presented in table. 2.

Article update dated July 17, 2019.

When analyzing a company’s activities, we recommend looking not only at the turnover of goods, but also evaluating it along with the level of service. If the company’s assortment is quite diverse, then we recommend analyzing turnover in monetary terms, and not in physical terms, since the cost of goods can differ hundreds and even thousands of times.

When calculating turnover in monetary terms, it is necessary to fix prices on the first or last day of the analyzed period. Otherwise, due to price changes, turnover may increase, which will not reflect the real picture.

In some companies, turnover is calculated in times per year. In this case, the higher the indicator, the better. In other companies, turnover is calculated in days. This indicator is called “coverage in days”. In this case, the smaller it is, the better."

One of the main indicators of the efficiency of a trading enterprise is inventory turnover. The inventory turnover ratio is the ratio of a company's sales to its assets. This indicator makes it clear how quickly the stock in the warehouse is sold. By looking at the inventory turnover ratio, you can understand how efficiently and successfully a company uses its assets to generate income.

Calculation of inventory turnover in natural units.

To calculate product turnover in natural units, you need to:

1) Select a period (week, month, year)

Where TZ1, TZ2, … TZn - the amount of inventory for individual dates of the analyzed period,

Inventory turnover formula

How to calculate turnover ratio?

Data on sales and product balances for the week:

Sales for the period = 3+5+6+3+2+5+2 = 26 units

How to calculate the turnover ratio for a group of goods?

For a group of goods, the logic for calculating turnover represents the following sequence of actions:

1. Select period
2. Calculation of sales amount by product group
3. Calculate the amount of balances for a group of goods for each day
4. Calculate average inventory
5. Calculate turnover ratio

Sales for the period = 30+33+48=111 units

Calculation of cash turnover ratio

1. Select period (week, month, year)
2. Calculate the average inventory for the selected period in monetary units (can be calculated by individual product or by product group)

where TZ1, TZ2, … TZn is the amount of inventory for individual dates of the analyzed period,

Ts - purchase price of goods
n - number of dates in the period.

CR - selling price

Formula for calculating cash turnover:

Turnover = Pd.u./Tzsr.u.

Inventory turnover calculation in Forecast NOW!

In Forecast NOW! In two clicks you can calculate the inventory turnover ratio for the year, both in monetary and physical units:

1. Go to the “Analysis - Efficiency” tab and set the period for which you want to calculate turnover:

2. Add the right mouse button or double click the product or product group for which you want to calculate turnover

3. Click “conduct analysis” and you will see the product turnover ratio for the selected period:

Everything that lies in our warehouse or moves towards it is a current asset of the store. But these are also frozen funds, the return of which we are looking forward to. To understand how long it takes us to “take out” money from circulation and invest it in inventories, we analyze inventory turnover.

If there is a product, then this is certainly good, but only until there is too much of it. The warehouse is full of goods - we pay taxes on the inventory, but it sells too slowly. Then we say – product turnover is low. But if it is very high, it means that the product is selling quickly, too quickly. Then the buyer, coming to us, runs the risk of not finding the right product. The answer is the ability to analyze and plan inventory turnover.

Concepts we operate with

Each manager uses terms such as “inventory”, “turnover”, “output”, “turnover”, “turnover ratio”, etc. However, when using economic and mathematical methods of analysis, confusion often arises in these concepts. As you know, exact sciences require precise definitions. Let's try to understand the terminology before we look at the concept of turnover in detail.

PRODUCT– products that are bought and sold; it is part of inventory. A product can also be a service if we require money from our buyer for it (delivery, packaging, payment for mobile communications by cards, etc.).

INVENTORIES– this is a list of assets (goods, services) of the company suitable for sale. If you're a retail and wholesale business, your inventory includes not only the products on your shelves, but also the products you have in stock, shipping, storing, or receiving—anything that can be sold.

If we're talking about STOCK, then goods in transit, goods in warehouse and goods in accounts receivable are considered as such (since the ownership of it remains with you until it is paid by the buyer, and theoretically you can return it to your warehouse for subsequent sale ). BUT: to calculate turnover, goods in transit and goods in accounts receivable are not taken into account - only the goods present in our warehouse are important to us.

AVERAGE STOCK (TZav)– the quantity that we need for the analysis itself.
How is it calculated TZsr for the period, see table 1 and example below:

Example

Calculation of average inventory ( TZsr) per year for a company selling, for example, small household chemicals and household goods:

Average TK for 12 months will be $51,066.

There is also a simplified formula for calculating average balances:

TZsr’ = (balances at the beginning of the period + balances at the end of the period) / 2.

In the above example TZsr‘ will be equal to (45,880 + 53,878)/2 = $49,879. However, when calculating turnover, it is still better to use the first formula (it is also called the average chronological moment series) - it is more accurate.

TRADE TURNOVER (T)– the volume of sales of goods and provision of services in monetary terms for a certain period of time. Trade turnover is calculated in purchase prices or cost prices. For example, we say: “The store’s turnover in December was 40,000 rubles.” This means that in December we sold goods worth 39,000 rubles and also provided services for home delivery of goods to our customers for 1,000 rubles.

Turnover and turnover ratio

The financial success of a company, an indicator of its liquidity and solvency directly depends on how quickly funds invested in reserves are converted into hard cash.

As an indicator of inventory liquidity, it is used INVENTORY TURNOVER RATIO, which is most often called simply turnover.

This coefficient can be calculated according to different parameters (by cost, by quantity) and for different periods (month, year), for one product or for categories.

There are several types of inventory turnover:

• turnover of each product item in quantitative terms (by pieces, by volume, by weight, etc.)
• turnover of each item of goods by value
• turnover of a set of items or the entire inventory in quantitative terms
• turnover of a set of items or the entire inventory by value

For us, two indicators will be relevant - turnover in days, as well as the number of product turnovers.

INVENTORY TURNOVER (IT) or INVENTORY TURNOVER RATE.
The speed at which goods turn around (that is, they come to the warehouse and leave it) is an indicator that characterizes the effectiveness of the interaction between procurement and sales. There is also the term “TURNOVER”, which in this case is the same thing.

Turnover is calculated using the classic formula:

(Balance of goods at the beginning of the month)/(Turnover for the month)

But for increased accuracy and correct calculation, instead of the balance of goods at the beginning of the period, we will use the average inventory (ASV)

LET'S NOTE THREE IMPORTANT POINTS before we begin calculating turnover.

1. If the company does not have inventories, then there is no point in calculating turnover: for example, we sell services (run a beauty salon or provide consultations to the public) or make deliveries to the buyer from the supplier’s warehouse, bypassing our own warehouse (for example, an online bookstore).

2. If we unexpectedly implemented a large project and sold an unusually large batch of goods to the buyer’s order. For example, the company won a tender for the supply of finishing materials to a shopping center under construction nearby and delivered a large batch of plumbing fixtures to the warehouse for this project. In this case, the goods supplied for this project should not be taken into account, since it was a targeted delivery of goods already sold in advance.

In both cases, the store or company makes a profit, but the inventory in the warehouse remains untouched.

In fact, we are only interested in LIVING STOCK - this is the quantity of goods that:

• came to the warehouse or was sold during the period under review (that is, any of its movements); if there was no movement (for example, elite cognac was not sold for a whole month), then it is necessary to enlarge the analysis period for this product
• and also this is the quantity of goods for which there was no movement, but the goods were on balance (including those with a negative balance)

If goods in the warehouse were reset to zero, then these days must be deleted from the turnover analysis.

3. All calculations for turnover must be carried out in purchase prices. Trade turnover is calculated not at the selling price, but at the price of the purchased goods.

Formulas for calculating turnover

1. TURNOVER IN DAYS- the number of days required to sell existing inventory, sometimes also called the average shelf life of goods in days. This way you can find out how many days it takes to sell average inventory.

Example

The product position “Hand Cream” is analyzed; as an example, Table 2 shows sales and inventory data for six months.

Let's calculate the turnover in days (how many days it takes us to sell the average stock of goods).

The average stock of cream is 328 pieces, the number of days on sale is 180, the sales volume for six months was 1,701 pieces.

Obdn = 328 pcs. (180 days / 1701 pieces = 34.71 days.

The average supply of cream turns over in 34–35 days.

2. TURNOVER IN TIMES– how many revolutions the product makes during the period (see formula 3).

The higher the company's inventory turnover, the more efficient its activities are, the less the need for working capital and the more stable the financial position of the enterprise, all other things being equal.

Example

Let's calculate the turnover in revolutions (how many times the stock is sold in six months) for the same cream.
1st option: Image = 180 days. / 34.71 = 5.19 times.
2nd option: Image = 1701 pcs. / 328 pcs. = 5.19 times.
Inventory turns over on average 5 times every six months.

3. PRODUCT INVENTORY LEVEL (STL)- an indicator characterizing the store’s supply of stocks on a certain date, in other words, for how many days of trading (given the current turnover) this stock will be enough:

Example

How many days will our existing supply of cream last?

Utz = 243 pcs. (180 days / 1701 pieces = 25.71.

For 25–26 days.

You can calculate turnover not in pieces or other units, but in rubles or other currencies, that is, by cost. But the final data will still correlate with each other (the difference will only be due to rounding of numbers) - see table. 3.

What does turnover give?

The main goal of inventory turnover analysis is to identify those products for which the speed of the “product-money-product” cycle is minimal in order to make a decision about their future fate.

To illustrate, consider an example of analyzing the turnover ratio of two goods – bread and cognac, which are part of the assortment of a grocery store (see Tables 4 and 5).

From this table it can be seen that bread and expensive cognac have completely different indicators - the turnover of bread is several times higher than cognac. But it is unlawful to compare products from different product categories - such a comparison gives us nothing. Obviously, bread has one task in a store, and cognac has a completely different one, and perhaps the store earns more from one bottle of cognac than from bread sales in a week.

Therefore, we will compare products within the category with each other - bread will be compared with other bread products (but not with cookies!), and cognac - with other elite alcoholic products (but not with beer!). Then we will be able to draw conclusions about the turnover of the product within the category and compare it with other products with similar properties.

Comparing products within the category, we can draw conclusions that tequila has a longer turnover period than the same cognac, and the intensity of turnover is less, and that whiskey in the category of elite alcoholic drinks has the highest turnover, and vodka (despite that its sales are twice as high as those of tequila) this figure is lower, which apparently requires adjusting the warehouse stock - perhaps vodka needs to be imported more often, but in smaller batches.

In addition, it is important to track the dynamics of changes in turnover in turnover (Obr) - compare with the previous period, with the same period last year: a decrease in turnover may indicate either a drop in demand, or an accumulation of poor quality goods or outdated samples.

Turnover in itself does not mean anything - you need to track the dynamics of changes in the coefficient (Turn), taking into account the following factors:

• the coefficient decreases - the warehouse is overstocked
• the coefficient is growing or very high (shelf life is less than one day) - working “on wheels”, which is fraught with the lack of goods in stock

In conditions of constant shortage, the average amount of warehouse stock can be equal to zero - for example, if demand is growing all the time, but we do not have time to deliver goods and sell them “off the shelf”. In this case, there is no point in calculating the turnover ratio in days - perhaps it should be calculated in hours or, conversely, in weeks.

If a company is forced to store goods of irregular demand or highly seasonal goods in a warehouse, then achieving high turnover is not an easy task. To ensure customer satisfaction, we will be forced to stock a wide range of hard-to-find items, which will slow down overall inventory turnover. Therefore, the calculation of turnover for all inventories in the company is incorrect. It would be correct to count by category and by product within categories (product items).

Also, for a store, the terms of delivery of goods play an important role: if the purchase of goods is made using its own funds, then turnover is very important and indicative; if on credit, then you invest your own funds to a lesser extent or do not invest at all, then low turnover of goods is not critical - the main thing is that the loan repayment period does not exceed the turnover rate. If the goods are taken mainly on terms of sale, then first of all it is necessary to proceed from the volume of warehouse space, and turnover for such a store is the last most important indicator.

Turnover and attrition

It is important not to confuse the two concepts – turnover and attrition.

TURNOVER– this is the number of product turnovers for the period.

CARE- an indicator that tells how many days it takes for a product to leave the warehouse. If when calculating we do not operate with the average technical specifications, but calculate the turnover of one batch, then in reality we are talking about departure.

Example

• On March 1, a batch of pencils in the amount of 1000 pieces arrived at the warehouse
• On March 31, there were no pencils left in stock (0)
• Sales equal to 1000 units

It seems that the turnover is equal to 1, that is, this stock turns over once a month. But it is necessary to understand that in this case we are talking about one batch and the time of its implementation. One batch doesn’t turn around in a month, it “goes away.”

If we calculate using the average stock, it turns out that on average there were 500 pieces in the warehouse per month.

1000/((1000 + 0)/2) = 2,

that is, it turns out that the average inventory turnover (500 pieces) will be equal to two periods.

That is, if we delivered two batches of pencils of 500 pieces each, then each batch would be sold in 15 days. In this case, it is incorrect to calculate turnover, because we are talking about one batch and do not take into account the period when pencils were sold to zero balance - perhaps this happened in the middle of the month.

To calculate the inventory turnover ratio, batch accounting is not needed. There is an inflow of goods and an outflow of goods. Given a period (for example, 1 month), we can calculate the average inventory for the period and divide the sales volume by it.

Turnover rate

Very often you can hear the question: “What turnover rates exist? Which is correct?

Turnover ratio does not have recommended values. There is only one pattern: the higher it is, the less time the goods are in the warehouse, the faster they turn into money.

But companies always have the concept of “TURN OVER RATE” and each company has its own concept.
TURNOVER RATE- this is the number of days (or turnover) for which, in the opinion of the company’s management, the stock of goods must be sold so that the trade can be considered successful.

Each industry has its own standards. Some companies have different standards for different product groups. So, for example, our trading company used the following norms (turnovers per year):

• construction chemicals – 24
• varnishes, paints – 12
• plumbing – 12
• facing panels – 10
• roll floor coverings – 8
• ceramic tiles – 8

In one of the chain supermarkets, the turnover rate for the non-food group is divided on the basis of ABC analysis: for goods A - 10 days, for goods of group B - 20 days, for C - 30. In this retail network, monthly turnover is included in the inventory indicator, and The inventory balance in the store consists of the turnover rate plus safety stock.

Also, some financial analysis specialists use Western standards.

Example

Dobronravin E. in the article “Turnover ratio and service level - indicators of inventory efficiency” writes:

“Usually, traders of industrial goods in Western enterprises have a turnover ratio of 6 if profitability is 20–30%.
If the profitability is 15%, the number of turns is approximately 8.
If the profitability is 40%, then a solid profit can be obtained with 3 turns per year.
However, as noted earlier, it does not follow that if 6 turns is good, then 8 or 10 turns are better. These data are indicative when planning general indicators.”

Henry Assell, in his book Marketing: Principles and Strategy, writes: “In order for businesses to operate profitably, their inventory must be turned over 25 to 30 times a year.” An interesting method for calculating the turnover rate is proposed by Dobronravin E. He uses a Western development that takes into account many variable factors: the frequency with which goods are ordered, transportation time, delivery reliability, minimum order sizes, the need to store certain volumes, etc.

What is the optimal amount of inventory turnover that can be included in the plan of a particular enterprise? Charles Bodenstab analyzed a large number of companies using one of the SIC systems for inventory management. The results of the empirical study were summarized in the following formula:

f in the proposed formula - a coefficient that generalizes the effect of other factors influencing the theoretical number of revolutions. These factors are:

• breadth of assortment in storage, that is, the need to store slow-moving stocks for marketing purposes
• larger than required purchases to obtain volume discounts
• requirements for a minimum purchase quantity from the supplier
• supplier unreliability
• economic order quantity (EOQ) policy factors
• overstocking for promotional purposes (promotion of goods)
• use of delivery in two or more stages

If these factors are at normal levels, then the coefficient should be about 1.5. If one or more factors have an extreme level, then the coefficient takes the value 2.0.

Example

The store has factors (they are indicated in Table 6) applied for different suppliers.
You can give several examples of what the turnover rate will look like when the formula is applied (see Table 7).

This means that if on average we import GOODS 3 twice a month (0.5) and transport it for 1 month, despite the fact that some factors (perhaps the supplier is unreliable) are not ideal, then the turnover rate can be considered 9.52. And for PRODUCT 5, which we rarely import (it takes a long time, and the influencing factors are very far from ideal), it is better to set a turnover rate of 1.67 and not demand too much from its sale.

But the practice of Western companies is very different from Russian conditions - too much depends on logistics, purchase volumes and delivery times, supplier reliability, market growth and demand for goods. If all suppliers are local and turnover is high, then the coefficients can reach 30–40 turnovers per year. If supplies are intermittent, the supplier is unreliable and, as often happens, demand fluctuates, then for a similar product in a distant region of Russia the turnover will be 10–12 turns per year, and this is normal

Turnover rates will be higher for small enterprises working for the end consumer, and much lower for enterprises producing products of group A (means of production) - due to the length of the production cycle.

Again, there is a danger of roughly following the standards: for example, you do not fit into the turnover standard and begin to reduce your safety stock. As a result, there are failures in the warehouse, there is a shortage of goods and unsatisfied demand. Or you start to reduce the order size - as a result, the costs of ordering, transporting and processing goods increase. Turnover increases, but availability problems remain.

The norm is a general indicator, and you should react and take action as soon as some negative trend is detected: for example, inventory growth is outpacing sales growth, and at the same time as sales growth, inventory turnover has decreased.

Then you need to evaluate all the products within the category (perhaps some individual items are purchased in excess) and make informed decisions: look for new suppliers who can provide shorter delivery times, or stimulate sales for this type of product, or give it a priority place in hall, or train salespeople to advise customers on this particular product, or replace it with another more well-known brand, etc.

Katerina Buzukova
Consultant for the Super-Retail project

Average inventory - formula , by which it is calculated, will be discussed in the article - it is an important economic indicator. What are the features of its application and calculation?

Why is inventory calculation necessary?

Inventory (hereinafter referred to as TK) is goods ready for sale, products placed in the organization’s warehouse awaiting shipment or stored there. In some cases, the structure of the TK includes goods that are in transit (for example, from a production unit to a warehouse), as well as reserved (until the buyer has paid for them and the ownership of the goods has not transferred to him).

It can be noted that the economic analysis of various indicators characterizing the TK is carried out mainly only for the TK that is placed in the warehouse: if it is on the way, then it is not known reliably whether it will arrive in the estimated quantity at the warehouse and whether it will not be recalled, and if The goods are contracted; they can be purchased by the customer at any time and written off from the company’s balance sheet.

Technical knowledge is one of the key resources of an organization that ensures the sustainability of its business model. The demand for goods produced by the enterprise can change quite often:

• increasing due to seasonal and other factors (in this case, the availability of inventory will allow the company to quickly satisfy demand and avoid shortfalls in revenue);
• decreasing (in this case, the company can reduce the current rate of production and save on production costs, and satisfy the existing demand through inventories).

In addition, reserves will come in handy if any difficulties arise in production and it temporarily stops or slows down.

Thus, the purpose of the technical specification is to ensure the smooth operation of the mechanism of interaction between the enterprise and the market:

• as a supplier capable of constantly meeting consumer demand;
• as a sustainable economic entity, which is an employer, an investment object, as well as a consumer of resources necessary to ensure the functioning of production and supplied by other economic entities.

In economic science, quite a lot of approaches have been developed to analyze indicators of technical requirements at an enterprise. Among the most popular is the calculation of average technical specifications for a specific time period, for example, for a certain number of days. Let's consider how it can be calculated.

Calculation of average inventory in days (formula and nuances)

If we are talking about calculating for a certain number of days average inventory - formula the following should be used:

STZ = [(TOV1 / 2) + TOV2 + TOV3 + (TOV (DAY) / 2)] / (DAYS - 1), where:

STZ - average inventory;

TOV1, TOV2, TOV3 - inventory, respectively, on the 1st, 2nd and 3rd day of the analyzed period;

TOV (DAY) - inventory on the last day of the analyzed period;

DAYS - the total number of days in the analyzed period.

Example

Let's say the company has technical specifications (TVs):

• on the 1st day - 100 units of goods (TVs);
• in the 2nd - 120;
• in the 3rd - 170;
• in the 4th - 70;
• in the 5th - 120.

If you use the specified formula for calculating inventory in average terms, the corresponding indicator for 5 days will be:

STZ = [(100 / 2) + 120 + 170 + 70 + (120 / 2)] / (5 - 1) = 117.5 TVs.

If there are only 2 dates in the analyzed period, a simplified formula can be applied:

STZ = (TOV1 + TOV2) / 2.

So, if on the 1st day of the analyzed period there are 100 televisions in the company’s warehouse, and on the second - 70, then the average technical specification in this case will be:

STZ = (100 + 70) / 2 = 85 TVs.

In a similar way, average technical specifications can be calculated for months, quarters and other periods, if this is necessary to solve certain business problems.

Results

TK is the most important resource of a company in terms of maintaining the functioning of its business model. Its value is important when applying management decisions aimed at maintaining the satisfaction of market demand, as well as decisions related to production optimization. The value of TK can be presented in average terms for a particular period.

You can get acquainted with the features of using other financial indicators of an enterprise’s economic activity in the articles:

Concept goods turnover determines how quickly the funds invested in goods will return to you, and even with a profit. This is one of the main formulas for the company's success. In this article we will look at how to calculate it.

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The concepts that we will need to determine the turnover of goods:

Product- a product produced for exchange. That is, to put it simply, the product could be a carton of milk, or it could be a model haircut or the services of a lawyer. In general, everything that can be bought with money or exchanged for something. We will talk about physical goods, not services.

Inventory- these are company assets that differ from inventories in that goods and materials are intended for sale, that is, they are already available in physical form in the company’s warehouse or store.

At the same time Inventory- this is a slightly different concept: inventory includes, for example, goods that have already been sold but not yet shipped, or vice versa - goods that you have already paid for, but which have not yet been delivered to your warehouse. We are only interested in what is physically in the warehouse now.

Trade turnover- this is the sum of the costs of all goods/services sold for a certain period. Simply put, how much did you sell goods for, for example, per month or per year. Trade turnover is calculated in purchase prices or in cost prices. We will base our calculations on purchase prices.

The last concept we will deal with when calculating product turnover is average inventory. It is calculated using a simple formula: balances at the beginning of the period + balances at the end of the period/2.

There is another, more complex, version of the same formula (let us assume that we divide the entire calculation period into equal periods of time - months): we divide the inventory in half at the purchase price at the beginning of the calculation period (T1: 2), sequentially add the amount of stocks of each month, the last month's supply is also divided in half. Thus, the following is obtained: T1:2+T2+T3+T4+...T12:2. We divide this amount by the number of time periods (months) minus one. That is: T1:2+T2+T3+T4+T5+T6+T7+T8+T9+T10+T11+T12:2/12-1

Do not be surprised if the results obtained from calculations using a simplified method and a more complex one differ.

Which of the two results you accept as true depends on what you want to get by calculating product turnover using the formula.

Why do we need a product turnover formula?

Now we need to determine what we want to analyze by calculating product turnover using the formula. For example, your “Autumn Waltz” chocolates are sold unevenly in different stores. Then it would be logical to compare turnover across different stores. Or, for example, you want to reduce the assortment and decide which products make sense to withdraw from sale. To do this, we will use an analysis of turnover by brand or product position of different manufacturers of the same product (it is obviously not worth comparing the turnover of vodka and herring).

How to calculate product turnover?

To determine the turnover of goods, two basic formulas are adopted. Let's start with a simpler one. Average inventory (at the purchase price, as we agreed at the beginning) multiplied by the number of days in the billing period and divided by turnover (or sales volume).

This formula is for product turnover in days, that is, the result will show us how many days the product inventory turns over. T␍×D/ObP

The second formula shows us how many times this product turns over over a certain period of time. To do this, you need to divide the sales volume (or turnover, which is the same thing) by the average inventory (at the purchase price) for this period. ObP/T␍

When making calculations, we recommend that you cross out the days when goods in the warehouse were reset to zero. You also need to approach calculations with caution in a situation where a company has received a large order (for example, won a tender for the supply of furniture for district schools); this furniture cannot be taken into account, since it was sold in advance (physically it is in the warehouse, but in fact, you know exactly who will pick it up and when).

By the way, many people confuse two concepts: product turnover and turnover ratio. Turnover gives us an idea of ​​which products have a shorter product-money-product cycle than others. But it makes no sense to compare the turnover of vodka and herring again. Or Borodino bread and elite cognac - the tasks of these goods are different, and from the sale of one bottle a store can easily earn more than from bread sales in a month. But to compare the turnover of different brands of milk - this makes sense. Moreover, milk is a perishable product, and if the remains are not sold, they will have to be disposed of.

Product turnover ratio- private turnover and average inventory for the period (in this case, we recommend calculating turnover in purchase prices, as is customary in warehouse accounting). ObP/T␍

What does the analysis of goods turnover give us?

It makes sense to carry out the analysis within one product category. For example, compare milk with milk, but not with cottage cheese, and compare cottage cheese with cottage cheese of different brands, but not with curd cheeses and not with curd rings. In this way we can understand several important things, namely:

• How often should this or that product be delivered?
• In what quantities should I purchase this product (large, medium or small).

However, neither the turnover analysis nor the turnover ratio gives a complete picture. It is necessary to analyze the dynamics of these indicators. For example, if the turnover in days of “Autumn Waltz” chocolate candies has halved over the year, this means that the demand for them has increased and it is necessary to increase the supply of candies of this particular type. High product turnover means some problems with profitability, which ones we will discuss in the following articles.

But without proper inventory accounting and analysis of the movement of goods in the warehouse, it will not be possible to see the turnover, so first of all you need to take care of accounting for goods. And this will help.