Inventory turnover period formula. Analysis of the turnover of inventories. Standard value of turnover
The balance sheet item "Inventories" is complex. It reflects the balances of stocks of raw materials, basic and supporting materials, fuel, purchased semi-finished products and components, spare parts, containers, goods, finished products and other similar values, as well as the costs of work in progress.
According to the Regulation accounting "Accounting for inventories" (PBU 5/11), inventory includes assets:
Used as raw materials, materials, etc. in the production of products intended for sale (performance of work, provision of services);
Intended for sale;
Used for the management needs of the enterprise.
Inventories are accepted for accounting at their actual cost in the amount of actual costs of their acquisition, with the exception of value added tax and other reimbursable taxes (except as provided by law Russian Federation).
Analysis of changes in the period of turnover of resources in stocks makes it possible to identify reserves for reducing the need for them by speeding up calculations, or, conversely, involving additional funds in an unfavorable state of affairs.
Inventory turnover analysis is carried out using following indicators: the turnover ratio of inventories, the shelf life of inventories and their components: inventories and finished goods, since the enterprise has no work in progress and goods shipped.
A finished product is a product that is completely finished with processing, complete, that has passed the necessary tests, complies with current standards or approved technical specifications, accepted by the service technical control enterprise and delivered to the warehouse or accepted by the customer. Otherwise, the product remains in work in progress and is not included in the finished product.
Inventory turnover ratio shows the rate of turnover of inventories for the analyzed period:
K MPZ \u003d S / E MPZ av, (81)
where K MPZ - the rate of turnover of inventories, turnover;
S - cost of sales, thousand rubles;
E MPZ Wed - the average annual cost of inventories, thousand rubles, is calculated by the formula:
E MPZ av \u003d (E MPZ start + E MPZ end) / 2, (82)
where E MPZ start, E MPZ con - the cost of inventories, respectively, at the beginning and end of the year, thousand rubles.
The higher this indicator, the less funds are associated with this least liquid item, the more liquid structure the working capital has and the more stable the financial position of the enterprise. It is especially important to increase the turnover and decrease the inventory in the presence of large debts at the enterprise. In this case, creditors' pressure may occur before anything can be done with stocks, especially in an unfavorable market environment.
Since inventories are accounted for at the cost of their acquisition, then to calculate the inventory turnover ratio, not revenue is used, but the cost of sales (form No. 2 "Statement of financial results").
calculated by the formula:
T MPZ = 360 / K MPZ, (83)
where T MPZ is the storage period of inventories, days.
The indicators of the turnover of inventories, work in progress and finished goods are calculated in a similar way.
Inventory turnover period is equal to the time during which they are in the warehouse before entering production. The growth of this indicator is due to a decrease in production volumes as a result of a decrease in sales and the formation of excess stocks of raw materials and materials and can be justified in the event that prices for raw materials and semi-finished products are expected to rise.
Duration of work in progress determines the time it takes to transform semi-finished products into finished products.
Inventory turnover period in finished goods is equal to the period of promotion of finished products to the consumer. A decrease in this indicator indicates an increase in demand for the company's products, growth - about an overstocking of finished products due to a decrease in demand, difficulties with sales.
Example 17... Analyze the efficiency of using the inventories of the enterprise in question.
Calculating values inventory turnover ratioin is carried out by formulas (81) and (82):
E MPZ Wed, 2012 \u003d (116829 + 75769) / 2 \u003d 96299 (thousand rubles)
E MPZ Wed, 2013 \u003d (75769 + 66,738) / 2 \u003d 71,253.5 (thousand rubles)
K MPZ 2012 \u003d 689246/96299 \u003d 7.16 (revolutions)
K MPZ 2013 \u003d 532786 / 71253.5 \u003d 7.48 (revolutions).
Shelf life of inventories calculated by the formula (83):
T MPZ 2012 \u003d 360 / 7.16 \u003d 50.07 (days)
T MPZ 2013 \u003d 360 / 7.48 \u003d 48.13 (days).
The indicators of the turnover of inventories and finished goods are calculated in a similar way.
Inventory turnover ratio is equal to:
E PZ Wed, 2012 \u003d (113493 + 73542) / 2 \u003d 93,517.5 (thousand rubles)
E PZ Wed, 2013 \u003d (73542 + 61330) / 2 \u003d 67436 (thousand rubles)
K PZ 2012 \u003d 689246 / 93517.5 \u003d 7.37 (revolutions)
K PZ 2013 \u003d 532786/67436 \u003d 7.90 (revolutions).
Shelf life of inventories is equal to:
T PZ 2012 \u003d 360 / 7.37 \u003d 48.85 (days)
T PZ 2013 \u003d 360 / 7.90 \u003d 45.57 (days).
Turnover ratio of finished products is equal to:
E GP Wed, 2012 \u003d (3336 + 2227) / 2 \u003d 2781.5 (thousand rubles)
E GP Wed, 2013 \u003d (2227 + 5408) / 2 \u003d 3817.5 (thousand rubles)
To GP 2012 \u003d 689246 / 2781.5 \u003d 247.80 (revolutions)
To GP 2013 \u003d 532786 / 3817.5 \u003d 137.21 (revolutions).
Shelf life of finished products is equal to:
T GP 2012 \u003d 360 / 247.80 \u003d 1.45 (days)
T GP 2013 \u003d 360 / 137.21 \u003d 2.62 (days).
The calculated indicators of the turnover of inventories of the analyzed enterprise for the period 2012-2013. are presented in table. 17.
Data analysis table. 17 shows that for the analyzed period:
The actual inventories of the enterprise decreased by 24,745.5 thousand rubles. or 25.70%;
The actual stocks of production stocks of the enterprise decreased by 26081.5 thousand rubles. or 27.89%;
Table 17
Analysis of the turnover of inventories
unitary enterprise
| P / p No. | Indicators | For 2012 | For 2013 | Absolute deviation |
| 1. | -156460 | |||
| 2. | Average annual cost inventories, thousand rubles | 71253,5 | -24745,5 | |
| of them | ||||
| productive reserves | 93517,5 | -26081,5 | ||
| finished products | 2781,5 | 3817,5 | ||
| 3. | Inventory turnover, turnover | 7,16 | 7,48 | 0,32 |
| of them | ||||
| productive reserves | 7,37 | 7,90 | 0,53 | |
| finished products | 247,8 | 139,56 | -108,24 | |
| 4. | Shelf life of inventories, days | 50,07 | 48,13 | -1,94 |
| of them | ||||
| productive reserves | 48,85 | 45,57 | -3,28 | |
| finished products | 1,45 | 2,58 | 1,13 |
Actual stocks of finished products of the enterprise increased by 1,036 thousand rubles. or 37.25%;
There is a slight acceleration in the turnover of inventories, the shelf life of which at the enterprise in 2013 decreased by 1.94 days compared to last year, therefore, the enterprise does not accumulate inventories;
There is a slight acceleration of the turnover of inventories, the shelf life of which at the enterprise in 2013 decreased by 3.28 days compared to last year.
Stocks of finished goods increased, since their turnover decreased by 108 revolutions, which is a negative trend, since, other things being equal, the risk of non-liquidity of finished goods increases.
Example 18. Analyze the structure of inventories of the analyzed enterprise.
Analysis of the structure of inventories of the analyzed enterprise is presented in table. 18.
Data analysis table. 18 shows that for the analyzed period:
Compared to the beginning of the year, the balances of inventories and inventories decreased by 47,864 thousand rubles, respectively. or by 42.21% and by 59,234 thousand rubles. or 45.53%;
Compared to the beginning of the year, the balances of finished goods and prepaid expenses increased by 2,072 thousand rubles, respectively. or by 62.11% and by 298 thousand rubles. or 307.22%;
The largest share is made up of industrial inventories, despite a decrease of 5.78%;
There is an increase in the balances of finished products and expenses of future periods and their specific weights, respectively, by 2,072 thousand rubles. or by 5.28% and by 298 thousand rubles. or 0.51%.
Assessment of the structure of inventories is carried out using accumulation rate , which is calculated as the ratio of the cost of inventories and work in progress to the cost of finished goods:
K nak \u003d (E PZ + E NP) / E GP, (84)
where K nak is the accumulation coefficient;
Е ПЗ - the cost of inventories, thousand rubles;
E NP - the cost of work in progress, thousand rubles;
E GP - the cost of finished products, thousand rubles.
The accumulation coefficient characterizes the level of mobility of inventories; must be less than 1.
Table 18
Analysis of the structure and dynamics of inventories
| P / p No. | Index | At the beginning of 2012 | At the beginning of 2013 | At the beginning of 2014 | Abs. off, thousand rubles, 2013 / | Abs. off,%, 2013 / | ||||
| Amount, thousand rubles | Ud. weight, % | Amount, thousand rubles | Ud. weight, % | Amount, thousand rubles | Ud. weight, % | |||||
| 1. | Inventories, total | 100,00 | 100,00 | 100,00 | - 47864 | - | ||||
| including | ||||||||||
| 1.1. | Productive reserves | 96,98 | 96,71 | 91,20 | -50234 | -5,78 | ||||
| 1.2. | Work in progress costs | - | - | - | - | - | - | - | - | |
| 1.3. | Finished products | 2,93 | 3,02 | 8,21 | 5,28 | |||||
| 1.4. | Goods shipped | - | - | - | - | - | - | - | ||
| 1.5. | Future expenses | 0,09 | 0,28 | 0,60 | 0,51 | |||||
| 1.6. | Other supplies and costs | - | - | - | - | - | - | - | - |
The values \u200b\u200bof the accumulation coefficient calculated for the period 2012-2013 are presented in table. nineteen.
Table 19
Accumulation Ratio Analysis
Calculated sthe accumulation coefficient is significantly higher than the recommended value, despite a decrease in inventories and an increase in finished goods, which indicates an unfavorable structure of inventories of the analyzed enterprise, the accumulation of excessive and unnecessary inventories.
8. Analysis and assessment of the structure of the balance sheet of the enterprise
Analysis and assessment of the structure of the company's balance sheet is carried out on the basis of the following indicators:
Current liquidity ratio;
Coefficient of provision of current assets with own circulating assets;
The coefficient of restoration (loss) of solvency.
Recovery (loss) ratio of solvency characterizes the presence of a real opportunity for an enterprise to restore (or lose) its solvency during a certain period time; calculated using the following formula:
K in / y \u003d ((K tl, end + P w / y / T * (K tl, end - K tl, beginning)) / K tl, norm, (85)
where K in / y - coefficient of restoration (loss) of the company's solvency;
K tl, beginning, K tl, con - the current liquidity ratio of the enterprise, respectively, at the beginning and end of the year;
K tl, norms - the standard value of the current liquidity ratio of the enterprise (equal to 2);
П в / у - the established period of restoration (loss) of the company's solvency, months;
T - reporting period, month (equals 12).
The structure of the balance sheet is considered unsatisfactory, and the enterprise is insolvent, if the current liquidity ratio at the end of the year is less than 2, and the ratio of current assets with own circulating assets at the end of the reporting period is less than 0.1.
The solvency recovery factor is calculated if at least one of these factors is below the standard. It is calculated over a period of 6 months. If the value of the coefficient is greater than 1, then the company has a real opportunity to restore its solvency.
If both ratios (current liquidity ratio and the ratio of current assets with own circulating assets) are higher than the standard value, then in this case the ratio of loss of solvency is calculated for a period of 3 months. If the value of the coefficient is greater than 1, then the company has no real opportunity to lose its solvency in the near future.
Example 20. Analyze and evaluate the structure of the balance sheet of the analyzed enterprise.
For the analyzed enterprise, the coefficients of loss of solvency were calculated, since both coefficients have values \u200b\u200bhigher than the standard (current liquidity ratio and the ratio of current assets with own circulating assets).
The values \u200b\u200bof the coefficient of loss of solvency are calculated by the formula (85):
K y, con. 2012 \u003d ((5.5 + 3/12 * (5.5 - 2.0)) / 2 \u003d 3.19
K y, end of 2013 \u003d (10.5 + 3/12 * (10.5 - 5.5)) / 2 \u003d 5.88
The values \u200b\u200bof the coefficient of loss of solvency, calculated for the period 2012-2013, are presented in table. 20.
Table 20
Analysis and assessment of the balance sheet structure
9. Analysis of the financial results of the enterprise
Financial results the activities of the enterprise are characterized by the amount of profit and the level of profitability. The greater the amount of profit and the higher the level of profitability, the more efficiently the enterprise functions, the more stable its financial condition.
Key financial results enterprises defined in absolute terms include gross profit, profit from sales and net profit... The formation of the financial result of an enterprise is influenced by production and financial factors, as well as an accounting policy in the field of accounting and taxation. As relative indicators use profitability indicators: total asset profitability, product profitability, profitability equity capital, profitability of core business, etc.
The financial results of the enterprise are determined by comparing income and expenses. The total financial result (profit or loss) is the algebraic sum of profits and losses from ordinary activities (profit / loss from the sale of products and goods, performance of work, provision of services), as well as other income and expenses.
The main elements of profit before tax, which form the basis of net profit, is revenue from saleswhich is the result of covering the gross profit of selling and administrative expenses. It reflects the role of marketing and production factors in the formation of the financial results of the enterprise. Gross profit represents the difference between revenue and cost of sales (this is an estimated analytical indicator).
Profit before tax characterizes the total economic effectreceived from financial economic activity under normal operating conditions of a unitary enterprise.
Net profit is the most important indicator that summarizes the results of the financial and economic activities of the enterprise, is aimed at increasing the capital of the enterprise (net loss reduces the capital of the organization). It shows the possibilities and boundaries of directing the capital of the enterprise for the purpose of expanded reproduction and the payment of income to the participants of the organization based on the results of the reporting year.
The source of information for the analysis of the financial results of the enterprise is form No. 2 "Statement of financial results", in which the income and expenses of the enterprise for the reporting period are reflected with a subdivision into income and expenses for ordinary activities and other income and expenses.
Analysis of the dynamics and composition of the profit of the analyzed enterprise is presented in table. 21.
Table 21
Analysis of the dynamics and composition of the enterprise's profit (rubles)
| P / p No. | Index | 2012 r. | 2013 | Absolute deviation | Rate of change,% | |
| Revenue | - 194479 | 76,10 | ||||
| Cost of sales | (689246) | (532786) | - 156460 | 77,30 | ||
| Gross profit | - 38019 | 69,48 | ||||
| Business expenses | (31677) | (37813) | 119,37 | |||
| Administrative expenses | - | - | - | - | ||
| Revenue from sales | - 44155 | 52,47 | ||||
| Interest receivable | - 3353 | 37,71 | ||||
| Percentage to be paid | (7214) | (3226) | - 3988 | 44,72 | ||
| Income from participation in other organizations | - | - | ||||
| Other income | 325,41 | |||||
| other expenses | (9260) | (35226) | 380,45 | |||
| Profit before tax | - 35745 | 56,72 | ||||
| Deferred tax assets | - | - | - | - | ||
| Deferred tax liabilities | (18) | (170) | 944,44 | |||
| Current income tax | (21925) | (10446) | - 11479 | 47,64 | ||
| Other payments from profit | (2) | (3) | - 1 | 150,00 | ||
| Net profit | - 24419 | 59,74 |
Data analysis table. 21 shows that for the analyzed period the enterprise received positive result from financial activities:
Net profit, which characterizes capital gains achieved in the reporting year as a result of financial and economic activities, decreased by 24,419 thousand rubles. or 41.26%; moreover, the net profit decreases faster than the gross profit, which is a negative trend;
Profit before tax, which characterizes the value of the total economic effect obtained from the financial and economic activities of the enterprise, decreased by 35,745 thousand rubles. or 43.28%;
Profits from sales are decreasing faster than revenues, which indicates a relative increase in production costs and is a negative trend.
An important indicator, reflecting the final financial results, is profitability. It characterizes the profit received from each ruble of funds invested in an enterprise or other financial transactions.
The profitability indicators of the analyzed enterprise are presented in table. 22.
Data analysis table. 22 shows that for the analyzed period:
All indicators of profitability of the analyzed enterprise decreased;
Profitability of sales and costs declined as the pace
the decrease in revenue and cost of sales exceed the rate of decrease in profit from sales, as a result, the profitability of sales decreased by 31.03%, and the profitability of costs - by 32.12%;
Profitability indicators working capital, fixed assets, total capital and equity, calculated on the basis of net profit, decreased by 33.78%, respectively; 47.03%; 39.37%; 45, 68%.
Table 22
Enterprise profitability indicators
| P / p No. | Index | 09 g. | 2013 | Absolute deviation | Rate of change,% | |
| Revenue, thousand rubles | -194479 | 76,10 | ||||
| Cost of sales, thousand rubles | -156460 | 77,30 | ||||
| Profit from sales thousand rubles | -44155 | 52,47 | ||||
| Net profit, thousand rubles | -24419 | 59,74 | ||||
| Average annual value of current assets, thousand rubles | -15764 | 90,23 | ||||
| Average annual value of fixed assets, thousand rubles | 143680,5 | 162019,5 | 112,76 | |||
| Average annual cost of total capital, thousand rubles | -4078 | 98,52 | ||||
| Average annual cost of equity, thousand rubles | 110,11 | |||||
| Return on sales,% (3: 1) | 11,41 | 7,87 | -3,54 | 68,97 | ||
| Return on costs,% (3: 2) | 13,48 | 9,15 | -4,33 | 67,88 | ||
| Profitability of working capital,% (4: 5) | 37,60 | 24,90 | -12,7 | 66,22 | ||
| Profitability of fixed assets,% (4: 6) | 42,21 | 22,36 | -19,85 | 52,97 | ||
| Return on total equity,% (4: 7) | 21,97 | 13,32 | -8,65 | 60,63 | ||
| Return on equity,% (4: 8) | 29,30 | 15,89 | -13,41 | 54,32 |
Conclusion
Thus, during the reporting period, there is a narrowing of the activity of the analyzed enterprise, and the funds were invested only in real estate, which indicates a tendency to a slowdown in the turnover of the entire set of assets of the enterprise and the creation of unfavorable conditions for its financial activities.
The property of the analyzed enterprise uses borrowed funds. On the one hand, this is positive, since shareholder risk is minimized and the company is ready to meet its payment obligations. But on the other hand, insufficient attraction of borrowed funds reduces its investment opportunities.
In general, the structure of the working capital of the analyzed enterprise for 2012013. improved as the share of liquid assets increased. A positive trend is an increase in the share of money and short-term financial investments by 5.8%, since they are absolutely liquid working capital with minimal investment risk (in absolute value, they increased by 7489 thousand rubles or 4.2 times). A negative trend is an increase in the share of accounts receivable (payments for which are expected within 12 months after the reporting date) by 14.83% (in absolute terms, they increased by 11,074 thousand rubles or 1.2 times), since accounts receivable are almost half of all working capital, which leads to instability financial condition enterprises.
During the analyzed period, there was an acceleration of the turnover of normalized working capital, which led to their release from circulation in the amount of 2,032.85 thousand rubles. ., which has a positive effect on the financial condition of the analyzed enterprise.
The slowdown in the turnover of circulating assets required their additional attraction into circulation in the amount of 22779.37 thousand rubles, which worsened the financial position of the enterprise.
Analysis of the turnover of receivables of the analyzed unitary enterprise for 2012-2013. shows that the state of settlements with customers has generally deteriorated compared to last year: the average maturity of accounts receivable has increased by 11.96 days, which indicates a slowdown in its turnover and an increase in the risk of its default; the share of accounts receivable in the total volume of working capital decreased by 5.67%, however, it remains quite high, which leads to instability of the financial condition of the enterprise; the share of doubtful accounts receivable in the total volume of accounts receivable increased by 5.01%, which indicates a decrease in the quality of accounts receivable.
The increase in the company's accounts receivable was mainly due to an increase in advances issued, the amount of which increased by 10,829 thousand rubles. or by 259.63%, and the amount of unpaid invoices by buyers and customers increased by 4203 thousand rubles. or 11.33%. Thus, the solvency of the analyzed enterprise to a certain extent depends on the financial condition of the partners.
The analysis of the turnover of inventories for the analyzed period showed that the enterprise as a whole and production stocks do not accumulate, but stocks of finished products are accumulated, which is a negative trend, since, other things being equal, the risk of their liquidity increases.
Calculated sthe accumulation coefficient is significantly higher than the recommended value, which indicates an unfavorable structure of the stocks of the analyzed enterprise, the accumulation of excess and unnecessary production stocks. Inventories are provided with sources of funds to cover them.
The obtained value of the coefficient of loss of solvency is more than 1 means that the company is solvent and in the next 3 months the company has no real opportunity to lose its solvency.
During the analyzed period, the company received a positive result from financial activities: the net profit characterizing the capital gain achieved in the reporting year as a result of conducting financial and economic activities decreased by 24,419 thousand rubles. or 41.26%; moreover, net profit declines faster than gross profit, which is a negative trend.
All profitability indicators of the analyzed enterprise decreased, which is a negative trend.
Thus, for the analyzed period, there is a decrease in the efficiency of production and sales of products (works, services), costs, use of capital and property of the enterprise.
List of references
1. Civil Code of the Russian Federation. Part one. November 30, 1994 No. 51-FZ (with amendments dated February 20 and August 12, 1996).
2. The Civil Code of the Russian Federation. Part two. January 26, 1996 No. 14-FZ (as amended on August 12, 1996 and October 24, 1997).
3. Labor Code Of the Russian Federation dated 30.12.2001 No. 197-FZ.
4. the federal law from 14.11.2002, No. 161-FZ "On state and municipal unitary enterprises".
5. Federal Law of March 28, 2002 No. 32-FZ "On Amendments and Additions to the Federal Law" On Accounting "".
6. Federal Law No. 83-FZ of May 8, 2010 "On Amendments to Certain Legislative Acts of the Russian Federation in Connection with Improving the Legal Status of State (Municipal) Institutions".
7. Federal Law dated July 27, 2010 No. 208-FZ “On Consolidated Financial Statements”.
8. Guidelines for the analysis of the financial condition of the organization: Approved. By order of the FSFR RF of January 23, 2001 No. 16.
9. Provisions on accounting "Accounting for inventories" PBU 5/11. Approved. By order of the Ministry of Finance of Russia dated 09.06.2001 No. 44n.
10. Regulation on accounting "Financial statements of the organization" PBU 4/99: approved. Order of the Ministry of Finance of the Russian Federation dated July 6, 1999 No. 43n, as amended. by the Order of the Ministry of Finance of the Russian Federation of 18.09.2006, No. 115n.
11. Regulation on accounting "Income of the organization" PBU 9/99: approved. Order of the Ministry of Finance of the Russian Federation of May 6, 1999 No. 32n, as amended. according to the Order of the Ministry of Finance of the Russian Federation dated November 27, 2006 No. 156n.
12. Regulation on accounting "Organization expenses" PBU 10/99, approved. Order of the Ministry of Finance of the Russian Federation of May 6, 1999 No. 33n, as amended. according to the Orders of the Ministry of Finance of the Russian Federation of December 30, 1999, March 30, 2001, September 18, 2006, November 27, 2006, No. 156n.
13. Abryutina M.S., Grachev A.V. Analysis of the financial and economic activities of the enterprise. - M .: DiS, 2001.
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15. Barngolts S.B., Melnik M.V. Methodology of economic analysis of a business entity. - M .: Finance and statistics, 2003 .-- 240 p.
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DEFINITION
Turnover ratio is the basic quantity determined during the planning of the required amount of stocks. This indicator determines the number of inventory turnovers for a certain period of time.
The formula for inventory turnover reflects the efficiency of using inventory in the process of making a profit from the main activity of the enterprise.
The turnover rate is relative value, it can be used to compare different periods. The inventory turnover formula determines the number of revolutions made by the inventory in the course of the business process.
When calculating the turnover indicator, there are 2 formulas for which three values \u200b\u200bare needed:
- Net sales (income),
- Cost of products sold,
- Inventory value (for example, annual average if the annual inventory turnover is calculated).
Inventory turnover formula
The inventory turnover formula is calculated as the ratio of income to the amount of inventory. The turnover value is measured in the number of revolutions for the corresponding period of time.
The formula for inventory turnover is as follows:
Cob. app. \u003d OP / Czap,
OR - sales volume (rubles);
Formula of inventory turnover through cost price
Many enterprises determine the inventory turnover through the cost of production, while the inventory turnover formula takes the following form:
Cob. app. \u003d Seb / Czap,
Here K ob.zap. - the stock turnover ratio;
Seb - cost products sold (rub.);
Czap. - the average amount of reserves (rubles).
The average inventory value can be determined by adding the amount of inventory at the beginning and end of a period (for example, a year) and dividing this amount by 2.
In our country, it enjoys a great advantage this method calculating inventory turnover than calculating revenue.
Indicator standard
For the indicator of inventory turnover, there is no standard value adopted for all enterprises. These values \u200b\u200bare best calculated and compared for enterprises in the same industry, and preferably in dynamics for one specific organization.
If there is a decrease in the inventory turnover ratio, this may indicate the following facts:
- Excess inventory accumulated,
- Low efficiency of warehouse management,
- A lot of unusable material has been accumulated, etc.
High turnover also does not always show the efficient operation of the company, since it can be an indicator of a low inventory value, which most often leads to interruptions production process.
For companies working with high profitability, is characterized by low turnover, and for those who work with a low rate of return, vice versa.
Examples of problem solving
EXAMPLE 1
| The task | The enterprise has an average stock of 1,600 pieces, last month - 1,250 pieces, with 12,000 pieces sold this month and 20,000 pieces last month. Determine the turnover of goods in days, if this month is 31 days, in the past 30 days. Compare the indicators of two months and draw a conclusion. |
| Decision | SW1 \u003d 1600 * 31/1200 \u003d 41.3 days SW2 \u003d 1250 * 30/2000 \u003d 18.8 days Conclusion. We see that it takes an average of 41 days for a company to sell its average inventory this month. In the past, this figure was about 19 days. This is a signal that a decrease in the quantity of imported material or an increase in sales is necessary. The material has started to turn around more slowly this month than last. |
| Answer | 41.3 days, 18.8 days. |
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122Turnover - basic principles
One of the main indicators of the efficiency of the logistics system in many companies is the inventory turnover.
Each company develops its own individual approach to the calculation of turnover, however, in most cases, the purpose of the calculation remains the same: to understand how quickly the average stock in the warehouse is sold (in the warehouse system, in the product distribution chain); how quickly we get the money we invested.
There is an exact determination of turnover: This is the ratio of the rate of sales to the average inventory for the period.
Large stocks freeze capital and the company cannot develop.
Therefore, the conclusion suggests itself: the higher the turnover, the better.
However, while striving for high turnover, one should not forget that a decrease in stock increases the risks of shortages and reduces the level of service for the company's customers.
Therefore, it is important to find the optimal ratio that will allow you to effectively use your stock and provide customers with a given degree of reliability.
To calculate the turnover, you need to have THREE parameters:
1. Period. It can be a week, month, quarter, year.
2. Middle commodity stock for the period.
3. Turnover for the period.
In order to draw a conclusion about the effectiveness of inventory turnover, it is best to:
Establish a certain standard of turnover, acceptable for the implementation of the strategic goals of the Company and assess its implementation;
observe the change in turnover from period to period - that is, to see it in dynamics.
If the Company has a credit system for settlements with suppliers (deferred payment for goods), then one of the important criteria for assessing the efficiency of turnover can be turnover and credit line ratio for this item. If the term of the loan received for the goods is more than the turnover (the estimate of the turnover in days), then the situation is more or less favorable: we return our invested money faster than the due date for payment of the goods. Ideally, the turnover in days should not exceed the loan term.
Average inventory
There is often confusion here when calculating turnover. Many people think
a) not the average stock, but the stock for "today". This is the stock level, and this method does not show the turnover, but how many days are left until the end of sales, that is, "how many cartridges will last." It can also be considered, but this is another parameter that does not reflect the dynamics.
b) average stock, but wrong. Take the first day of the period and the last day, and divide it in half. This is incorrect, as it does not reflect the dynamics of stocks throughout the month.
For example, this figure shows how the number of goods in the warehouse changed over a month - during this period there were situations of both a shortage and overstocking of the warehouse.
If the measuring points are located at regular intervals, the formula can be used to calculate the average inventory
TZ cf i - half the sum of two adjacent measurements of the values \u200b\u200bof the inventory;
ti - time interval between two adjacent measurements.
Note: Whether to take into account the days when goods are out of stock when calculating the average is a moot point. Each company accepts individual solution by this issue... There is an opinion that the exclusion from the calculation of zero balances makes the turnover assessment more accurate in terms of obtaining information about how many times during the period it was possible to wrap the funds invested in the product, but, undoubtedly, also the following - the exclusion of zero balances complicates the system for setting the turnover rate and analysis its implementation.
Formulas for calculating turnover
The turnover is calculated in days or times.
1. Turnover in daysshows how many days it takes to sell an average stock. It is calculated by the formula:
2. Turnover at timessays how many times the product “turned around” and sold during the period. Calculated by the formulas:
|
About times \u003d Turnover for the period / Average inventory for the period |
Turnover rate
Turnover rate - This is the number of days or revolutions for which the stock of goods must be realized, taking into account the strategic goals of the company.
Each industry has its own norms. Each region has its own norms. Each supplier has its own standards. Each type or category of goods has its own norms.
Analysis of the measurement results of turnover
When comparing, you can build the "Turnover-Margin" matrix and see which products bring us more profit for the same period, and which ones less.
Comparative data on margin and turnover
| Product | Purchase price | Selling price | Margin | Turnover (days) |
Turnover (once a month) |
Profit from one unit of goods per month | Priorities |
| item 1 | 20 | 60 | 40 | 40 | 0,75 | 30 | 10 |
| item 2 | 19 | 48 | 29 | 20 | 1,5 | 43,5 | 7 |
| item 3 | 21 | 80 | 59 | 30 | 1 | 59 | 3 |
| item 4 | 18 | 36 | 18 | 10 | 3 | 54 | 4 |
| item 5 | 13 | 36 | 23 | 5 | 6 | 138 | 1 |
| item 6 | 16 | 35 | 19 | 12 | 2,5 | 47,5 | 5 |
| item 7 | 12 | 33 | 21 | 15 | 2 | 42 | 8 |
| item 8 | 15 | 45 | 30 | 12 | 2,5 | 75 | 2 |
| item 9 | 19 | 50 | 31 | 20 | 1,5 | 46,5 | 6 |
| item 10 | 19 | 40 | 21 | 20 | 1,5 | 31,5 |
As you can see, product 5, although it has an average trade margin, has the best turnover of all and brings the greatest profit per month per unit of production. And item 1, which has a high margin, shows the worst turnover. Therefore, for a month per unit of production, the profit is minimal. What can be done? Need to figure out if this poor turnover is caused by excess inventory or poor sales? Then take action. If the problem is in sales, then stimulate turnover. If the problem is in excess stock, then it is necessary to stop importing goods in huge quantities.
Matrix "Turnover-Margin"
By correlating the two parameters - margin (or trade margin) and turnover - it is possible to distribute goods within one category according to this matrix.
As you can see, the most interesting for us are goods with a high turnover and a high margin. The assortment may also include products with low turnover, but this must be compensated for by a high mark-up. Products with a low mark-up may be in the assortment provided. That they have a good turnover, that is, the company does not spend money on the sale of these goods. Products with low mark-ups and poor turnover should not be in the assortment.
If such goods are present in the matrix, then we can do the following:
Take them out of the assortment. However, "mechanical cleaning" is dangerous because we can "throw out" and new product, and related goods, accessories or fashion goods. Therefore, before we "throw out" someone, we need to analyze the history of this product and understand its role in the general assortment.
translate them into the square “high margin - low turnover”. It is necessary to understand what kind of product it is that is selling slowly. Perhaps this is an expensive fashion product, and we simply positioned it incorrectly and receive less profit.
translate it into the square "low markup - high turnover", stimulating sales or reducing the amount of stock.
Sometimes it happens that we have to put up with the fact that for some goods we have a bad turnover and this is not a mistake of the buyer or sales. These are conditions that cannot be adjusted. Usually this is due to the terms of delivery - for example, the supplier goes on vacation (closes the plant for maintenance for two months) and to provide the company with stocks, it is necessary to purchase two to three months' stock. Or the delivery of goods takes so long (for example, a container by sea from China) that to ensure uninterrupted supply, you have to buy goods in large quantities. You need to understand that this is the price of a business ...
Notes
The article was prepared using materials from the article of the assortment management consultant E.A. Buzukova. "Simple and familiar turnover"
It is very important for a company selling products to be able to manage inventory in order to profit from its activities. Calculating the inventory turnover period allows you to understand how well the company is doing in terms of inventory. With this information, you can compare your company's inventory turnover period with your competitors' inventory turnover. A shorter period of inventory turnover will indicate a higher turnover and better return on assets. Calculating the inventory turnover period requires knowing the cost of goods sold for the period and the average inventory value for that period. To calculate the inventory turnover period in days, you will first need to calculate the inventory turnover ratio, for which you will need the aforementioned cost price and the average cost of the company's inventory.
Steps
Part 1
Inventory turnover ratio calculation- The cost of sales is reflected in the income statement. It is the value that is deducted from the revenue and gives the gross profit.
- IN trading company The cost of sales can be simplified as follows: Cost of sales \u003d Cost of inventory at the beginning of the period + Purchase of inventory during the period - Cost of inventory at the end of the period
- For example, consider a period of 12 months, at the beginning of which the company had stocks of RUB 9,000,000, during the period it purchased goods for RUB 20,000,000, and at the end of the period, stocks were RUB 3,000,000.
- A simplified cost estimate would look like this: 9,000,000 + 20,000,000 - 3,000,000 \u003d 26,000,000 (rubles).
- The resulting value of 26,000,000 rubles will be shown in the income statement on the line of the cost of sales.
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Determine the average value of the company's inventory over the period. The average value of the cost of inventory for the reporting period is determined by the formula for calculating a simple average. The value of a company's inventory may vary significantly during the reporting period. That is why it makes sense to use its average value to calculate the financial indicators of turnover. The average value avoids inaccuracies due to sudden changes in inventory levels.
- Average cost of inventory for the period: (Stock at the beginning of the period + Stock at the end of the period) / 2.
- For example, in the reporting year, the company had stocks at the beginning of the year in the amount of 9,000,000 rubles, and at the end of the year - 3,000,000 rubles.
- The average cost of inventory for the year will be as follows: (9,000,000 + 3,000,000 / 2 \u003d 6,000,000 (rubles).
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Use the formula to calculate 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 over the 12 month period under review, the cost of sales was RUB 26,000,000 and the average inventory value was RUB 6,000,000. To calculate the inventory turnover ratio, you will need 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.
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Use the formula for calculating the 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 this period. In the above example, the turnover rate was 4.33. Since in the considered example a period of 12 months was used, then total days in the period will be 365.
- The inventory turnover period will be calculated as follows: 365 / 4.33 \u003d 84.2 (days).
- This suggests that it takes 84.2 days for the company to fully realize its average inventory.
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Apply an alternative calculation formula. If you have not previously calculated the inventory turnover ratio, you can directly use the cost of sales and average inventory values \u200b\u200bto 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 RUB 6,000,000, the cost of sales is RUB 26,000,000, and the analyzed period is 365 days.
- The calculation of the inventory turnover period will look like this: (6 000 000 / 26 000 000) * 365 = 84,2
- Received the same value. It takes a company 84.2 days to fully realize its average inventory.
Get to know the concept of the inventory turnover ratio. Inventory turnover tells how many times a company uses and replenishes its inventory in a given period of time. The low turnover ratio allows us to judge that the company's assets are used ineffectively and give low profit. In such a situation, the company holds too many reserves, as it does not manage to use them quickly enough. A high turnover rate can be an indicator that a company is missing out on an upsell opportunity when a customer wants to purchase a product but the company does not have enough inventory to manufacture and sell it.
Determine the cost of goods sold. Cost of goods sold represents direct costs incurred in the production of goods or the provision of services. In the service sector, the cost price includes personnel costs, including wages, bonuses, taxes. In retail or wholesale trade the cost price includes the cost of purchasing goods from the manufacturer, as well as expenses incurred in connection with the purchase of goods, their storage and display on store shelves.
Part 3
Analysis of the inventory turnover period-
Examine the money cycle. The cash cycle reflects the number of days it takes a company to convert its resources into cash flows. The inventory turnover period is one of three components of this indicator. The second component is the period of turnover of receivables, or the number of days, necessary for the company for collection of receivables. The third component is the turnover period accounts payable, or the number of days it takes a company to pay off its accounts payable.
The turnover of inventories characterizes the speed of movement of material assets and their replenishment. The faster the turnover of capital placed in stocks, the less capital is required for a given volume of business transactions.
The turnover of inventories in industries varies significantly. In industries with a long operating cycle, building stocks requires more capital.
Timing turnover of inventories of enterprises in the same industry, as a rule, characterize how successfully they use capital. As it was found out earlier, the accumulation of stocks is associated with a very significant additional cash outflow, which makes it necessary to assess the possibility and feasibility of reducing the shelf life of material assets.
Level stocks are determined by the volume of sales, the nature of production, the nature of stocks (the possibility of their storage), the possibility of interruptions in supply and the cost of acquiring stocks (possible savings from purchases of a larger volume), etc.
The level of work in progress depends on the nature of production, industry characteristics, method of assessment.
The main factor that must be considered when analyzing the level of finished goods inventory is the sales forecast. In turn, forecasting the volume of sales requires a correct anticipation of the needs of buyers. Therefore, one of the advantages of long-term economic ties is associated with the ability to coordinate the production of products with the purchase plans of buyers.
Assessment of the turnover of inventories is carried out for each of their types (inventories, finished products, goods, etc.). To assess the rate of inventory turnover in a simplified way (according to reporting data), the formula is used
Inventory turnover \u003d Cost of goods sold / Average inventory
Average inventory value \u003d Inventory balances at the beginning of the year + Inventory balances at the end of the year / 2
A more accurate estimate of the average inventory is based on monthly inventory balances.
The shelf life of stocks is determined by the formula
Inventory shelf life \u003d Duration of the analyzed period * Average inventory / Cost of goods sold
For a more accurate calculation of the storage duration of stocks, the formulas
Inventory storage \u003d Opz. * Duration of the analyzed period / Cost of consumed stocks
Storage of finished products \u003d OPZ * Duration of the analyzed period / Production cost of shipped (sold) products
Analysis of the state and dynamics of inventory turnover at the enterprise is presented in table. 3.22.
The data confirm the earlier conclusions regarding the overall slowdown in the turnover of current assets. This is clearly seen in the example of inventory turnover, the shelf life of which at the enterprise increased by 5.5 days compared to last year, which indicates the accumulation of inventories at the enterprise.
This situation is becoming more common in the context of the rupture of economic ties and inflation. The fall in the purchasing power of money is forcing businesses to invest temporarily surplus funds in stocks of materials. In addition, the accumulation of stocks is often a forced measure to reduce the risk of non-delivery (under-delivery) of raw materials and materials necessary for the production process of the enterprise. Note in this regard that an enterprise that focuses on one main supplier is in a more vulnerable position than enterprises that base their activities on contracts with several suppliers.
At the same time, it should be borne in mind that the policy of accumulating stocks of inventories inevitably leads to an additional outflow of funds due to:
- increase in costs arising from holding inventory (rent storage facilities and their maintenance, costs of moving stocks, property insurance, etc.);
- an increase in costs associated with the risk of losses due to obsolescence and damage, as well as theft and uncontrolled use of inventory items (it is well known: the larger the volume and shelf life of property, the more difficult it is to control its safety);
- increasing the amount of taxes paid. In conditions of inflation, the actual cost of consumed inventories (the amount written off to the cost) is significantly lower than their current market value. As a result, the amount of profit is "inflated", but it is from it that the tax payable will be calculated. The picture is similar with value added tax. The fact that property tax increases with increasing inventories is probably self-explanatory;
- diversion of funds from circulation, their "mortification".
Excessive stocks stop the movement of capital, disrupt the financial stability of the activity, forcing the management of the enterprise to urgently seek the funds necessary for the current activity (as a rule, expensive). Therefore, not without reason, excessive inventories are called the "business graveyard".
These and other negative consequences of stockpiling policies often completely offset the positive effects of savings from earlier purchases.
A significant cash outflow associated with the cost of forming and storing stocks makes it necessary to find ways to reduce them. At the same time, of course, we are not talking about reducing the amount of expenses for the creation and maintenance of inventories to a minimum. Such a solution, most likely, would be ineffective and would lead to an increase in losses of another kind (for example, from damage and uncontrolled use of inventory items). The challenge is to find a "middle ground" between excessively large stocks that can cause financial difficulties (lack of funds) and excessively small stocks that are dangerous for production stability. Such a task cannot be solved in the conditions of a spontaneous formation of reserves - an established system of control and analysis of the state of reserves is needed.
In the theory and practice of inventory management, there are the following main signs of an unsatisfactory resource control system:
- the tendency to a constant increase in the duration of storage of stocks; continuous growth of stocks, significantly outstripping the dynamics of increase in the volume of products sold;
- frequent equipment downtime due to lack of materials; lack of storage space;
- periodic refusal from urgent orders due to a lack (absence) of inventories;
- large amounts of write-offs due to the presence of obsolete (stale), slow-moving stocks;
- significant volumes of inventory write-offs due to damage and theft.
The main objectives of control and analysis of stocks:
- ensuring and maintaining liquidity and current solvency;
- reduction of production costs by reducing the cost of creating and storing stocks; reducing the loss of working time and equipment downtime due to lack of raw materials and materials; prevention of damage, theft and uncontrolled use of material assets.
Achievement of the set goals involves the implementation of the following accounting and analytical work.
1. Assessment of the rationality of the structure of reserves, allowing you to identify resources, the volume of which is clearly excessive, and resources, the acquisition of which needs to be accelerated. This will avoid the unnecessary investment of capital in materials, the demand for which is decreasing or cannot be determined. It is equally important when assessing the rationality of the structure of stocks to establish the volume and composition of spoiled and slow-moving materials. This ensures the maintenance of inventories in the most liquid state and the reduction of funds immobilized in inventories.
2. Determination of terms and volumes of purchases of material assets... This is one of the most important and difficult tasks for analyzing the state of reserves for the modern conditions of the functioning of Russian enterprises.
Despite the ambiguity of the decisions made for each specific enterprise, the general approach to determining the volume of purchases, which allows taking into account:
- the average consumption of materials during the operating cycle (usually determined based on the results of the analysis of the consumption of material resources in past periods and the volume of production in the conditions of the expected sale);
- additional amount (safety stock) of resources to reimburse unexpected material costs (for example, in the case of an urgent order) or increase the period required to form the necessary stocks.
3. Selective regulation of inventories, suggesting that attention should be focused on expensive materials or materials with high consumer appeal. In foreign practice, the so-called ABC method has become widespread, the techniques of which can be applied to russian enterprises... The main idea of \u200b\u200bthe ABC method is to evaluate each type of materials in terms of their value. This refers to: the degree of material use for a specific period; the time it takes to replenish stocks of this material, and the costs (losses) associated with its out-of-stock; the possibility of replacement, as well as losses from replacement.
A small share (usually up to 20%) of these material resources in the total amount of material assets stored in the warehouse determines the main amount of cash outflow during the formation of stocks (about 80%). Such materials are considered as resources of group A. Materials of group B are classified as minor; they are less expensive than materials of group A, but surpass them in the number of items. Materials of group C are considered relatively unimportant - these are the least expensive and most numerous material values. Their acquisition and maintenance are accompanied by an insignificant (in comparison with the total amount) cash outflow. Typically, the costs of storing such stocks are less than the costs of maintaining tight control over ordered lots, safety (safety) stocks and stock balances.
Material resources are divided into the listed groups depending on the specific production conditions. The principle here is that the materials of group A are most carefully controlled. Particular attention is paid to: calculating the need for them; scheduling the formation of stocks and their use; justification of the amount of insurance stocks; inventory.
Others useful in modern conditions mass theft, the method of control over the state of inventories may be their division into "sticky", that is, scarce or expensive (for example, precious metals, alcohol, narcotic drugs), to which special storage conditions and additional methods of control over their movement are applied, and "non-sticky", for which bulk storage, unauthorized use and "boiler" accounting are allowed.
4. Calculation of indicators of the turnover of the main groups of stocks and their comparison with similar indicators of the past periods in order to establish the correspondence of stock availability to the current needs of the enterprise. To do this, calculate the turnover of materials accounted for on various sub-accounts ("Raw materials and materials", "Purchased semi-finished products and components, structures and parts", "Fuel", "Containers and container materials", "Spare parts", etc.), and then the overall material turnover by determining the weighted average.
When analyzing the turnover of working capital, you should pay attention to the following:
- the duration of the operating cycle of the enterprise and its components; the main reasons for the change in the duration of the operating cycle; the ratio of the duration of the operating cycle and the period of repayment of accounts payable;
- the reasons for the discrepancy between the financial result and changes in funds;
- main factors of cash outflow;
- the rate of turnover of receivables;
- the validity of the existing storage period for inventory items.