On the formula for calculating inventory turnover

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On the inventory turnover rate improved formula

In current assets, a larger proportion of stock, stock liquidity current ratio of enterprises have a major impact, so the flow of inventory analysis is very important. With the inventory turnover rate of the general indicators to reflect that the inventory turnover or inventory turnover days. Analysis of the situation through the inventory turnover is conducive to find out the problems in the management, to minimize the level of funds used to improve the stock's liquidity and profitability. So the correct calculation of inventory turnover has an important role in management decisions. Inventory turnover rate is calculated as: the main business inventory turnover = cost / average inventory, however, this method of calculation of the enterprises have some reasonable, we can not very well reflect the efficiency of enterprise inventory turnover, in practice to combine its real significance and the specific analysis of the situation, so that better reflect the business inventory turnover efficiency. First, the traditional formula of the irrationality of the average inventory First, the calculation of the denominator unrealistic. Average inventory reflects the average occupancy during a given period the amount of inventory, that is occupied by the average inventory is calculated as the average inventory = (beginning inventory + ending inventory) / 2, values can be obtained from the balance sheet. The true meaning of the average inventory during this period the amount of the average occupancy, and by the beginning and end of the year means the average obtained by the average inventory average of just two points in time and does not reflect changes in inventories during the period of The average amount of inventory takes, for example, during this time period, the inventory of each possession and possession of time and can not be reflected in the formula. For the seasonal production of enterprises, since the off-season and did not consider the different inventory turnover regular season, only two points in time using numerical results of the calculation is far from. The purpose of the analysis of inventory turnover is from a different perspective and links to find out problems in inventory management, enhance the short-term solvency and promoting business management levels. Unreasonable method of calculating the management decision-making will have some misleading. Therefore, the denominator of the formula calculating the average inventory can not reflect reality. The second is the formula the numerator and denominator caliber inconsistent. Molecular formula because of the cost of using the main business inventories at cost, but also to maintain the caliber and the denominator of the same diameter line to the numerator and denominator is the corresponding denominator is the actual inventory in order to generate income or profits to the enterprise support Some average inventory, but its average inventory formula is the average opening and closing all of the inventory refers average usage. Stock in the company practice, not all the possession in order to generate income, in real business inventories can be used in the production and sales can also be used for construction purposes or corporate welfare facilities, but not for the latter part of produce the main business cost, and therefore should not be included in the denominator, the average stock in the calculation of the numerator and denominator caliber inconsistent. Second, the inventory turnover rate improved method First, the average inventory is calculated using the average order time. Point average inventory by an average of only simple reality is very different, is not conducive to the management of the inventory turnover rate of further decision-making, especially the seasonal differences in production enterprises would be great. For business managers or conditional calculation of the average stock of external users of financial statements should be used when the average number of procedures through various changes in inventories in the period of time after such changes take points and data period, the weighted average of the time sequence in order to integrate the reflect inventory changes within a given period on the average possession of. Calculated as follows: in stock within a period of change in the number of T n, as the inventory changes every time si, its duration ti, beginning inventory s0, closing stock sn, the average inventory method with the average order To: this calculation of the average inventory can be taken into account during this period and changes in inventory turnover rate, more in line with the actual business management needs. Second, the denominator to eliminate the cost of nothing to do with the main business items in order to maintain the same caliber. Inventory turnover rate in the calculation of the numerator and denominator should remain the same caliber, so the results make sense,[link widoczny dla zalogowanych], otherwise management will have some misleading, is not conducive to the development of optimal strategies, molecular denominator for the main business includes the cost has nothing to do with the molecular inventories are used for the construction works of the inventory, it should be removed using a certain method. The stock purchase is VAT input tax, VAT details in the subjects is reflected in, and the corporate If inventory will be used in construction projects turn out value-added tax VAT, will also add value payable tax be reflected in a breakdown of subjects, it can be transferred through the input tax the VAT and the VAT rate estimate does not correspond with the main business part of the cost of removing them. Calculated as follows: remove part of the average inventory (S ')