Inventory turnover shows. Merchandise turnover. How and why to count it. Video lesson: “Calculation of key indicators of business activity for OAO Gazprom”

DEFINITION

Turnover rate is the most important quantity that is necessary when planning the required amount of stocks. Using this coefficient, you can determine the number of inventory turnovers for the selected period.

The formula for the inventory turnover ratio on the balance sheet reflects the efficiency of their use in the operation of the enterprise in the process of making a profit.

The inventory turnover ratio is a relative value, that is, it can be used when comparing several periods of a company's operation. The balance sheet inventory turnover formula calculates the number of turnovers that inventory makes during the business process.

There are 2 formulas for calculating the turnover ratio, which contain the following components:

• Net sales indicator (revenue),
• Cost price goods sold,
• Inventory cost (for example, the average for the year in the case of calculating the annual inventory turnover).

Equity inventory turnover formula

The balance sheet inventory turnover formula is calculated by dividing the amount of sales proceeds by the average inventory value:

KOZ \u003d OR / Zsr.,

B - proceeds from the sale of products (rubles);

Zav. - the average value of reserves (rubles).

When calculating inventory turnover, the company's financial statements are used. The balance sheet inventory turnover formula is in the following way:

KOZ = line 2110 / line 1210

To calculate the denominator of the formula, it is required to determine the average amount of stocks for a certain period (month, quarter, year). The calculation is made by adding the amount of stocks at the beginning and end of the period (for example, a year) and dividing this amount by 2.

Formula for calculating the average inventory value:

Zsr \u003d (Znp + Zkp) / 2

Zav = (1210np + 1210kp) / 2

Here 1210np and 1210 kp are the corresponding lines at the beginning and end of the period.

Inventory turnover formula through cost price

Some companies calculate the inventory turnover in accordance with the cost of goods. The formula takes the following form:

KOZ \u003d Seb / Zsr,

Here KOZ - inventory turnover ratio;

Seb - the cost of goods sold (rubles);

Зav - the average cost of reserves (rubles).

This method of calculation in our country is more popular than the calculation of revenue.

The normative value of turnover

The inventory turnover indicator does not have certain standards that all enterprises would accept. The coefficient is most often used for calculation and comparison for enterprises in the same industry, as well as for tracking the dynamics for one particular enterprise.

In the case of a decrease in the inventory turnover ratio, we can talk about the following situation:

• excess stockpiles,
• Low efficiency inventory management,
• Excess unsuitable material, etc.

Efficiency is not always reflected in high turnover, as this can be a sign of low inventory levels, which most often can lead to production interruption.

For companies operating with high level profitability, low turnover is inherent, and vice versa for enterprises with a low rate of return.

Examples of problem solving

EXAMPLE 1

EXAMPLE 2

Exercise	Determine and compare the company's turnover rates for 2 months of work, if this month there is an average stock of material of 1600 pieces, in the past month - 1250 pieces. Sold this month 12,000 pieces, last month - 20,000 pieces.
Decision	Zav (1 month) = 1600 * 31 / 1200 = 41.3 days 3 wed (month 2) = 1250* 30 / 2000 = 18.8 days Conclusion. Thus, we have determined that it takes an average of 41 days for an enterprise to sell an average stock of products. Last month, this indicator was at the level of 19 days. This situation indicates the need to reduce the decrease in the amount of imported material or increase the number of sales. We can conclude that the material this month turns around more slowly than in the past.
Answer	41.3 days, 18.8 days

Successful management commercial activities of any direction requires management to constantly review the underlying economic indicators. One of them is inventory turnover. This indicator in dynamics allows you to determine the efficiency of the use of raw materials and materials in the organization.

What is inventory turnover in days

Inventory turnover in days shows the time period during which the company's raw materials (stocks) go through a full turnover. The value of this indicator is used not only by analytical services, but also by the logistics department, which determines the organization's need for raw materials, and also makes up the scheme for the movement of stocks between company divisions.

Why might an organization need to calculate an indicator such as inventory turnover in days? First of all, the inventory turnover period is intended to build a system of forecasts of inventory balances in warehouses. In this case, it is not enough for the organization to know how quickly the raw material turns around. To predict, you need information about how long the entire cycle lasts. It is for this purpose that inventory turnover is calculated in days (calculation formula below).

Calculation of inventory turnover in days: formula

In order to determine how to calculate the inventory turnover in days, first of all, it is necessary to calculate the turnover ratio, which clearly reflects the turnover of raw materials in times, that is, the number of turnovers made during a specific time interval. The value of the turnover ratio is determined based on the formula:

• To about-ty \u003d Revenue or Cost / Average inventory

The company has the right to independently determine which of the indicators to take as a basis, cost or revenue.

You can determine the value of the average inventory as follows:

• Average inventory = (Sum of inventory at the beginning of the period + Sum of inventory at the end of the period) / 2.

By calculating the inventory turnover ratio, you can determine the inventory turnover in days.

• Formula: Turnover in days \u003d Time interval in days / K volume.

In most cases, 365 calendar days are taken as an indicator of the time interval.

Inventory turnover value

The legislation does not establish a normative value of inventory turnover in days. Companies should independently determine the optimal duration of the movement of goods and materials. In order to calculate the value of the indicator, which will best correspond to the type of activity carried out and the economic situation in the organization, experts recommend analyzing inventory turnover for several time intervals simultaneously.

Comparing the value of the inventory turnover period in dynamics, it is important to note that the higher the value of this indicator, that is, the longer the full cycle, the greater the balance of goods in warehouses and, as a result, the lower the inventory turnover. In the case when the turnover in days is low and the stocks carry out a full turnover in a short period of time, the company uses raw materials with high efficiency and returns.

A thorough analysis of turnover indicators allows you to thoroughly study the rationality of using a particular raw material, as well as, on the basis of analytical measures, develop and approve a program for controlling the movement of stocks in an organization.

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

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

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

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

Wherein Inventory- this is a slightly different concept: the inventory includes, for example, goods already 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 now physically in the warehouse.

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. The turnover is calculated in purchase prices or in cost prices. We will base our calculations on purchase prices.

The last concept that we will deal with when calculating the turnover of goods 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 (we 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), successively add the amount of inventory of each months, the stock of the last month is also divided in half. Thus, the following is obtained: Т1:2+Т2+Т3+Т4+...Т12:2. 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 as a result of calculations by a simplified method and by a more complex one will differ.

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

Why is the product turnover formula needed?

Now we need to determine what we want to analyze by calculating the turnover of goods using the formula. For example, you have uneven sales of “Autumn Waltz” chocolates in different stores. Then it would be logical to compare the turnover in different stores. Or, for example, you want to reduce the range and decide which products it makes sense to withdraw from sale. To do this, we apply the analysis of turnover by brand or commodity items of different manufacturers of the same product (obviously, it is not worth comparing the turnover of vodka and herring).

How to calculate the turnover of goods?

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

This formula is the turnover of goods in days, that is, the result will show us how many days the stock of goods turns around. T␍×D/OBP

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

We recommend that you cross out the days when the items in the warehouse were reset to zero. It is also necessary 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 as if in advance (physically it is in stock, 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 goods have a shorter goods-money-goods cycle than others. But again, it makes no sense to compare the turnover of vodka and herring. Or Borodino bread and elite cognac - the tasks of these products are different, and a store can earn more from the sale of one bottle than from sales of bread 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 leftovers are not sold, they will have to be disposed of.

Product turnover ratio- private turnover and average stock for the period (at the same time, we recommend counting the turnover in purchase prices, as is customary in warehouse accounting). ObP/T␍

What does the analysis of the turnover of goods 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, but cottage cheese with cottage cheese of different brands, but not with curds and not with cottage cheese rings. In this way, we can understand several important things, namely:

• With what frequency should this or that product arrive;
• What batches to buy this product (large, medium or small).

However, neither the analysis of turnover 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” chocolates has halved in a year, this means that the demand for them has grown and it is necessary to increase the supply of chocolates of this particular name. A high turnover of goods means some problems with profitability, which ones we will discuss in the following articles.

But without proper commodity accounting and analysis of the movement of goods in the warehouse, it will not be possible to see the turnover, therefore, first of all, you need to deal with the accounting of goods. And this will help.

For a company that sells products, it is very important to be able to manage inventory in order to profit from its activities. Calculating the period of inventory turnover allows you to understand how well the company is doing in terms of inventory. Having this information, you can compare your company's inventory turnover period with that of your competitors. A shorter inventory turnover period will indicate higher inventory turnover and a better return on assets. The calculation of the period of inventory turnover requires knowledge of the cost of goods sold for the period and the average cost of inventory for this period. In order to calculate the inventory turnover period in days, you will first need to calculate the inventory turnover ratio, for which you will need the above cost and the average cost of the company's inventory.

Steps

Part 1

Calculation of inventory turnover ratio

Get to know the concept of inventory turnover ratio. Inventory turnover refers to the number of times a company uses and replenishes its inventory in a given period of time. A low turnover ratio suggests that the company's assets are used inefficiently and yield low profits. In such a situation, the company holds too much inventory because it does not have time to use them quickly enough. A high turnover ratio can be an indicator that a company is missing out on an opportunity additional sales when a customer wants to purchase a product, but the company does not have enough inventory to produce and sell it.

Determine the cost of goods sold. Cost of goods sold represents the direct costs incurred to produce a product or provide a service. In the service sector, the cost includes personnel costs, including wages, premiums, taxes. in retail or wholesale trade The prime cost includes the cost of purchasing goods from the manufacturer, as well as expenses incurred in connection with the acquisition of goods, their storage and display on store shelves.

• The cost of sales is reflected in the income statement. financial results. It is the value subtracted from the revenue and gives the gross margin.
• In a trading company, the cost of sales can be simplified as follows: Cost of sales = Inventory value at the beginning of the period + Inventory purchases during the period - Inventory value at the end of the period
• For example, consider a period of 12 months, at the beginning of which the company had inventories of 9,000,000 rubles, during the period goods were purchased for 20,000,000 rubles, and at the end of the period the inventory was 3,000,000 rubles.
• A simplified cost estimate would look like this: 9,000,000 + 20,000,000 - 3,000,000 = 26,000,000 (rubles).
• The resulting value of 26,000,000 rubles will be indicated in the income statement under the cost of sales line.

1. Determine the average value of the company's inventory for the period. The average value of inventory for the reporting period is determined by the formula for calculating a simple average. The value of a company's inventory can vary significantly during an accounting period. That is why in order to calculate financial indicators turnover, it makes sense to use its average value. The average value avoids inaccuracies due to sharp fluctuations in inventory levels.

   • Average inventory value for the period: (Inventory at the beginning of the period + Inventory at the end of the period) / 2.
   • For example, in the reporting year, the company had inventories in the amount of 9,000,000 rubles at the beginning of the year, and 3,000,000 rubles at the end of the year.
   • The average cost of inventory for the year will be as follows: (9,000,000 + 3,000,000 / 2 = 6,000,000 (rubles).

2. Use the formula for calculating the inventory turnover ratio. Knowing the cost of sales and the average cost of inventory for the period, you can calculate the inventory turnover ratio. From the above examples, it is clear that for the 12-month period under consideration, the cost of sales was 26,000,000 rubles, and the average cost of inventory was 6,000,000 rubles. To calculate the inventory turnover ratio, it will be necessary to divide the cost price by the average inventory value.

   • 26 000 000 / 6 000 000 = 4,33
   • That is, this company uses and replenishes its reserves 4.33 times per year.

3. Use the formula for calculating inventory turnover period. The inventory turnover period is determined by dividing the number of days in the analyzed period by the inventory turnover ratio for that period. In the example above, the turnover ratio was 4.33. Since in this example a period of 12 months was used, the total number of days in the period will be 365.

   • The inventory turnover period will be calculated as follows: 365 / 4.33 = 84.2 (days).
   • This suggests that it takes the company 84.2 days to fully sell its average inventory.

4. Apply an alternative calculation formula. If you have not previously calculated the inventory turnover ratio, you can directly use cost of sales and average inventory value to calculate the inventory turnover period. You will need to divide the average inventory value by the cost of sales for the period. Then the resulting number must be multiplied by the number of days in the analyzed period.

   • In the above examples, the average inventory value is 6,000,000 rubles, the cost of sales is 26,000,000 rubles, and the analyzed period is 365 days.
   • The inventory turnover calculation would look like this: (6 000 000 / 26 000 000) * 365 = 84,2
   • Got the same value. It takes the company 84.2 days to fully sell its average inventory.

Part 3

Analysis of inventory turnover period

1. Explore the circulation cycle Money. The cash cycle reflects the number of days it takes for a company to convert its resources into cash flows. The inventory turnover period is one of the three components of this indicator. The second component is the receivables turnover period, or the number of days it takes for a company to collect receivables. The third component is the accounts payable turnover period, or the number of days a company needs to pay off its accounts payable.

One of the main indicators of the effectiveness of inventory management is inventory turnover. The turnover indicator is included in the group of indicators of the business activity of the enterprise.

The higher a company's inventory turnover, the lower the need for working capital to purchase inventory. Turnover acceleration allows the company to release frozen working capital and invest these funds in the development of new areas.

Definition of Inventory Turnover

Inventory turnover shows how many times during the analyzed period the organization used the average available inventory balance. This indicator characterizes the quality of stocks and the effectiveness of their management, allows you to identify the remains of unused, obsolete or substandard stocks.

The importance of the indicator is due to the fact that profit occurs with each "turnover" of stocks (ie, use in production or in the operating cycle in a trading company). That is, even a slight increase in the number of turnovers increases the profit that the company receives from the invested money turnover. Please note that in this case, stocks are also understood as commodity stocks (stocks finished products) and inventories (stocks of raw materials and materials).

Formulas for calculating the turnover rate

To assess the turnover, two indicators are used: the turnover ratio and the turnover period in days / months. You can also find other names for these indicators: turnover in turnovers or times, as well as turnover in days / months.

Let's move on to the formulas for calculating these indicators.

The inventory turnover ratio shows how many turnovers does the average inventory for a specified period.

Turnover ratio = Turnover for the period / Average inventory value for the period

Let's take a closer look at each parameter that is used in this calculation.

Turnover for the period is the consumption in production (shipments from warehouse to production) for the period, if we calculateturnover ratio for raw materials and materials.

Or, Turnover for a period is sales for a period, if we calculateturnover ratio for goods or finished products.

In what units do we use turnover when calculating - pieces / kilograms or rubles? It depends on the purpose of calculating turnover ratios. In addition, you need to take into account the following: if you consider the turnover for one nomenclature item, then in this case you can use either a quantitative expression of turnover, or a cost one. If we consider turnover rates for several items, for example, for a group of goods, then in this case, to assess the turnover, it is necessary to use the value of turnover in value terms.

The next question that often arises is: should sales be taken into account in full or at cost? Correct Answer: There are two options. In practice, there are two options for calculating the turnover ratio for goods / finished products:

• at cost of sales;
• by sales revenue.

In the first option, when determining inventory turnover, the numerator reflects the cost of sales. In the second case - the total proceeds from sales.

Which option to choose, it is necessary to decide within the company. However, for the purpose of evaluating the effectiveness of inventory management, I consider the option using the cost of sales to be more correct.

Thus, for goods and finished products, the formula for calculating the turnover ratio is as follows:

K about. inventory = cost of sales for the period, rub. / Average cost of stocks for the period, rub.

With another option for calculating this coefficient, the numerator does not reflect the cost of sales, but revenue and the coefficient is calculated as follows:

K about. inventory = Revenue for the period rub. / Average cost of stocks for the period, rub.

Calculation of average stocks

Average inventory value for a period is defined as:

Average inventory value for the period = Inventory value at the end (beginning) of each day / Number of days in the period

Average annual inventory value (most accurate) = Inventory value at the end (beginning) of each day / 365 days

Accordingly, Average monthly inventory value = Inventory value at the end of each day for the month / Number of days in the month

Average annual inventory (when only monthly data is available) = Inventory value at the end of each month / 12

From a statistical point of view, the correct formula for calculating the average is as follows:

ТЗav = (Тз1/2 + Тз2 + Тз3 + ТзN/2) / (N-1)

Where:

ТЗav - average stocks for the period

Tp1 - TpN - stocks for each day of the period;

N is the number of dates in the period.

This is the formula for calculating the mean for the sample. In terms of statistics, data on sales, balances, etc. are a sample.

Sampling - random selection of a subgroup of elements from the main population, the characteristics of which are used to evaluate the entire population as a whole.

Another indicator of turnover is -inventory turnover period in days/months or duration of one turnover in days/months

The formula by which this indicator is calculated:

Turnover period (days) = Average cost of stocks for the period, rub. *Number of days in the period/ Turnover for the period

Let me remind you that for goods and finished products, turnover is sales for the period in rubles.

The turnover period is usually estimated in days, you can hear them say - "We have a turnover of 30 days." In some companies, the turnover period is estimated in months, most often for goods with long delivery times.

There is an inverse relationship between the Turnover Ratio and the Turnover Period.

Turnover period in days = 365 days / Turnover ratio

and vice versa.

Turnover analysis

Okay, now we have calculated the turnover rates, and what's next? What do these numbers show us? How can we determine whether our turnover rate is good or not?

The fact is that the turnover indicator itself will not be able to say anything about the effectiveness of inventory management. It must be monitored in dynamics or compared with established standards. It is very revealing to compare the actual value of the turnover rate with the normative value. The calculation of this value can be carried out using the Charles Bedenstab formula, which I describe in my articles and " .

In retail companies, it is also useful to compare the actual value of the turnover indicator in days - the period of turnover, with the value of the deferred payment to suppliers. If the delay in days is greater than the turnover period, then in this case the company does not invest its own funds in the purchase and at the same time makes a profit.

What else is important to remember about turnover?

It is important to remember that the change in the value of the turnover indicator occurs not only in connection with a change in the purchase of goods, but also depends on sales.

If the value of turnover worsens, then this indicates that:

• the company accumulates excess inventory,
• the company has poor sales (or they are declining).

If the turnover value improves, then this indicates that:

• the company increases inventory turnover,
• sales increase.

It is also important to remember that evaluating the effectiveness of inventory management in a company only by turnover can lead to a shortage in the company. After all, the highest values ​​of the turnover indicator are in the case when there is a shortage in the warehouse, and this negatively affects sales and the business as a whole. Therefore, stocks must be evaluated by two indicators - turnover and supply of sales goods.

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