The period of turnover of inventories is the formula for the balance sheet. Inventory turnover in days. Inventory turnover period

Inventory turnover ratio is an indicator of development, replacement of enterprise reserves by moving financial resources from the category of stocks to production and / or sale. Reveals the number of use of the average available deposits of products for the analyzed period.

Inventory turnover is a priority criterion for the overall business environment and should be carefully considered. The business activity of the company directly depends on this indicator - the faster the money returns to the balance sheet of the enterprise in the form of sales income finished products, the higher it will be.

Any company develops an individual plan for calculating the circulation of reserves, the purpose of which is the same - to understand how quickly the average stock passing in the chain of commodity circulation (in the warehouse) will be sold, as well as the rate of return of the invested money.

Characteristics of the indicator

The analysis of the turnover indicator is carried out within a single market segment, in dynamics for the organization in question, which can characterize its state:

the rise- indicates the exhaustion of the warehouse assortment, which often leads to malfunctions. Comparing previous periods, the result may turn out to be too high: means insufficient availability of stocks;
decline- expresses the accumulation of surplus stocks, unproductive warehouse management, surplus of unusable materials. When compared with the previous year, the result is probably too low: the reserves are not competitive, or too large.

In addition, the inventory turnover ratio shows the marketing strategy of a legal entity.

Low turnover is characteristic of super-profitable enterprises than for companies with normal profitability.

When striving for a high turnover of reserves, one must remember that a decrease in inventory increases the risks of shortage, and the level of service for buyers decreases.

You need to find the best approach that allows you to effectively use your savings, as well as provide customers with the required security. To determine this, you need:

to establish the turnover standard, which is optimal for the implementation of the priority goals of the enterprise, to assess its implementation;
to trace fluctuations of the reversibility in dynamics.

When the enterprise has a credit settlement system, the main criterion for assessing productive activity is the ratio of the credit line to the circulation of the presented goods.

The loan term may be longer, then the situation is positive: the company will return the invested money quickly, until the moment of payment for the goods.

The calculation of the stock turnover rate is made according to the norms - the number of cycles or days during which the stocks of products must be sold in accordance with the set goals of the enterprise.

The formula for the balance of calculating the indicator of the turnover of reserves is as follows:

In calculating the turnover ratio of inventories, instead of profit, the cost of production is sometimes used, which is expressed in the formula:

The higher this result, the more rational is production management - the need for working capital is minimized.

Stock parameters

Period- applies to perishable products with an exact indication of the expiry date;

Times- the number of transactions for the sale of goods:
Trade turnover for the period- the value of prices according to warehouse accounting;

Average inventory for the period- reveals the amount of products that are in the warehouse for a specified time. With equal measurements of the time interval, the formula is used to calculate it:

In calculating indicators with unequal time intervals, the chronological weighted algorithm is used:

At all enterprises, individual decisions are made to determine the average for the accounting of days when goods are out of stock. It is not always necessary to exclude zero balances - they will complicate the analysis of the inventory turnover rate.

Production management considers the fundamental aspects of the formation of reserves, respectively, the optimal ratio of the degree of risk and profitability of the enterprise:

Conclusion

The price of a business is sometimes determined by cases where some products have poor turnover, which is not an omission or a mistake in managing the work. Such moments cannot be adjusted.

For example, a supplier may go on vacation, closing the plant for maintenance for several months, in connection with which the company buys raw materials in stock for the period of "unplanned failure" or other factors.

Inventory turnover characterizes the speed of movement material values 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, inventory building requires more capital.

The timing of the turnover of inventories of enterprises in the same industry, as a rule, characterizes how successfully they use capital. As previously explained, the accumulation of stocks is associated with a very significant additional outflow Money, which makes it necessary to assess the possibility and feasibility of reducing the shelf life of material values.

The level of stocks is 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 purchasing 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 needs to 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 = Cost products sold/ Average stocks

Average inventory value = 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 material balances.

The shelf life of stocks is determined by the formula

Inventory shelf life = Duration of the analyzed period * Average inventory value / Cost of goods sold

For a more accurate calculation of the storage duration, the formulas are used
Storage of inventories = Opz. * Duration of the analyzed period / Cost of consumed stocks

Storage of finished products = Opz * Duration of the analyzed period / Production cost shipped (sold) products

Analysis of the state and dynamics of inventory turnover at the enterprise is presented in table. 3.22.

The data confirms the earlier conclusions regarding the overall slowdown in turnover. current assets... This is clearly seen in the example of the turnover of inventories, 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 required for production process enterprises. 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 the holding of inventories (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);
increase in the amount of taxes paid. In an inflationary environment, the actual cost of consumed inventories (the amount written off to cost) is significantly lower than their current market value. As a result, the amount of profit turns out to be "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 stocks of 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 costs 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 inventories). 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 the stability of production. 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, the following main features of an unsatisfactory resource control system are distinguished:
a tendency to a constant increase in the duration of storage of stocks; continuous growth of stocks, significantly outstripping the dynamics of an 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 lack (absence) of inventories;
large amounts of write-offs due to the presence of obsolete (stagnant), slowly turning stocks;
significant volumes of inventory write-offs due to damage and theft.
The main objectives of control and analysis of the state of stocks: ensuring and maintaining liquidity and current solvency;
reducing production costs by reducing the cost of creating and storing stocks; reduction of losses 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. Evaluation of the rationality of the structure of stocks, allowing 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 for which the demand is diminishing 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 the timing and volume 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 is to determine the volume of purchases, which makes it possible to take 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 the ABC method is to evaluate each type of materials in terms of their value. This refers to: the degree of use of the material for a specific period; the time required to replenish stocks of this material, and the costs (losses) associated with its absence in the warehouse; 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 secondary; 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, insurance (safety) stocks and stock balances.

Material resources are divided into the listed groups depending on the specific production conditions. The main point here is that the materials of group A are most carefully controlled. Particular attention is paid to: calculating the need for them; scheduling formation of reserves 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 can 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 the availability of stocks to the current needs of the enterprise. To do this, calculate the turnover of materials accounted for in various subaccounts ("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 turnover working capital 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;
reasons for discrepancy financial result and changes in funds;
main factors of cash outflow;
the rate of turnover of receivables;
the validity of the existing shelf life of inventory
values.

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If there is a product, then this is certainly good, but only as long as there is not too much of it. The warehouse is full of goods - we pay taxes on the inventory, but it sells too slowly. Then we say - the turnover of goods is low. But if it is very high, it means that the product is being sold quickly, too quickly. Then the buyer, having come to us, runs the risk of not finding the right product. The answer lies in the ability to analyze and plan turnover commodity stocks.

Each manager uses terms such as "inventory", "turnover", "exit", "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 take a closer look at the concept of turnover.

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

Inventory- This is a list of assets (goods, services) of the company, suitable for sale. If you are in retail and wholesale trade, then your inventory is not only the products on the shelves, but also the goods in stock, supplied, stored or received - anything that can be traded.

If we are talking about stock of goods, then these are considered goods in transit, goods in stock and goods in receivables (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 the turnover, goods in transit and goods in accounts receivable are not taken into account - only the goods in our warehouse are important to us.

Average inventory(ТЗср) - the value that we need for the actual analysis. ТЗср for the period is calculated according to the formula 1.

Example:

Calculation of the average inventory (TZav) for the year for a company that sells, for example, small household chemicals and household goods, is given in table. 1.

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The average TK for 12 months will be $ 51,066.

There is also a simplified formula for calculating average balances:

ТЗср` = (balances at the beginning of the period + balances at the end of the period) / 2.

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

Turnover(T) - the volume of sales of goods and provision of services in monetary terms for certain period time. Sales 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 rendered services for the delivery of goods to our customers for 1,000 rubles.

The financial success of a company, the indicator of its liquidity and solvency directly depends on how quickly the funds invested in stocks turn into real money.

As an indicator of the liquidity of stocks, we use inventory turnover ratio, which is most often referred to simply as turnover.

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

There are several types of inventory turnover:

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

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

Inventory turnover(ABOUT) or stock circulation rate... The speed with which a product turns around (that is, it comes to the warehouse and leaves it) is an indicator that characterizes the efficiency of interaction between purchases and sales. There is also the term "TRANSPORTABILITY", which in this case is the same.

The turnover is calculated according to the classic formula:

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

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

Let's note three important points before we start calculating the turnover.

1. If the company does not have stock, then it makes no sense to calculate the turnover: for example, we sell services (we run a beauty salon or give advice to the public) or we supply the buyer from the supplier's warehouse, bypassing our own warehouse (for example, an online book store).

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

In either case, the store or company makes a profit, but the inventory in the warehouse remains intact.

In fact, we are only interested in live stock 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, the 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 there was a zeroing of goods in the warehouse, then these days should be deleted from the turnover analysis.

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

Formulas for calculating turnover

Turnover in days

The number of days it takes to sell the available inventory (see Formula 2).

Sometimes it is also called the average shelf life of a product in days. This will tell you how many days it takes to sell average stocks.

Example:

Analyzed the commodity item "Hand cream", as an example in the table. 2 shows data on sales and stocks for half a year.

Let's calculate the turnover in days (for how many days we sell the average stock of goods). The average stock of the cream is 328 pieces, the number of days on sale is 180, the sales volume for six months was 1701 pieces.

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

The average stock of cream turns around in 34–35 days.

Turnover at times

How many revolutions does the product make 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 financial position enterprises, all other things being equal.

Example:

Let's calculate the turnover in turnover (how many times the stock is sold for 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.

The stock is rotated on average 5 times per six months.

Product inventory level

An indicator characterizing the supply of stocks to a store for a certain date, in other words, for how many days of trade (with the prevailing turnover) this stock will last (see formula 4).

Example:

How many days will the available cream supply last?

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

For 25-26 days.

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

What does turnover give?

The main purpose of the inventory turnover analysis is to determine those goods for which the speed of the “commodity-money-commodity” cycle is minimal in order to make a decision about their future fate.

To illustrate, consider an example of analysis of 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 that of cognac. But it is illegal to compare products from different product categories- such a comparison gives us nothing. It is obvious that bread has one task in the store, while cognac has a completely different one, and it is possible that the store earns more on one bottle of cognac than from selling bread in a week.

Therefore, we will compare products within the category with each other - we will compare bread 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 product turnover within the category and compare it with other products with similar properties.

Comparing the products within the category, we can conclude that tequila has a longer turnover period than that of the same cognac, and the turnover rate is less, and that whiskey in the elite alcoholic drinks category has the highest turnover, while vodka (despite the fact that its sales are twice as high as that of tequila), this figure is less, which, apparently, requires an adjustment of the warehouse stock - perhaps, vodka should 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 goods of poor quality or outdated samples.

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

the coefficient decreases - there is an overstocking of the warehouse;
the coefficient is growing or very high (shelf life is less than one day) - work "on wheels", which is fraught with the lack of goods in the warehouse.

In conditions of constant deficit, the average value of the warehouse stock can be equal to zero - for example, if the demand is growing all the time, and we do not have time to bring the goods and sell them "off the wheels." In this case, it makes no sense to calculate the turnover ratio in days - perhaps it should be counted in hours or, conversely, in weeks.

If a company is forced to store goods of irregular demand in a warehouse, goods with a strongly pronounced seasonality, then achieving high turnover is not an easy task. To ensure customer satisfaction, we will be forced to have wide range of rarely sold goods, which will slow down the overall inventory turnover. Therefore, the calculation of the turnover for all stocks in the company is incorrect. It will be correct to count by categories and by products within categories (commodity items).

Also for the store, the terms of delivery of goods play an important role: if the purchase of goods is made using its own funds, then the turnover is very important and indicative; if on credit, then own funds you invest to a lesser extent or do not invest at all, then the 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 the terms of sale, then first of all it is necessary to proceed from the volume of warehouse premises, and the turnover for such a store is the last indicator of importance.

Turnover and yield

It is important not to confuse the two concepts - turnover and yield.

Turnover- This is the number of turnovers of the goods for the period.

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

Example:

On March 1, a batch of 1000 pencils arrived at the warehouse. On March 31st there were no pencils left in the warehouse (0). Sales are equal to 1000 pieces. It seems that the turnover is equal to 1, that is, once a month this stock has turned around. But it is necessary to understand that in this case we are talking about one party and about the time of its implementation. One batch does not turn around in a month, it “leaves”.

If we calculate by 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 turnover of the average stock (500 pieces) will be equal to two periods. That is, if we delivered two batches of 500 pencils, each batch would be sold in 15 days. In this case, it is incorrect to calculate the turnover, because we are talking about one batch and the period when the pencils were sold to zero balance is not taken into account - perhaps this happened in the middle of the month.

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

Turnover rate

One often hears the question: “What are the turnover rates? How is it correct? "

But in companies there is always the concept of "TURNOVER RATE" and each company has its own.

Turnover rate- This is the number of days (or turnovers) for which, in the opinion of the company's management, the stock of goods must be sold in order for the trade to be considered successful.

Each industry has its own norms. Some companies have different regulations for different groups goods. So, for example, our trading company used the following rates (turnover per year):

construction chemistry - 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 days. the stock of goods in the store is made up of the turnover rate plus the safety stock.

Also some specialists in financial analysis use Western norms.

Example:

"Usually traders of industrial goods in Western enterprises have a turnover ratio of 6, if the profitability is 20-30%," E. Dobronravin writes in the article "Turnover ratio and service level - indicators of inventory efficiency." - If the profitability is 15%, the number of revolutions is approximately 8. If the profitability is 40%, then a solid profit can be obtained with 3 revolutions per year. However, as noted earlier, it does not follow that if 6 rpm is good, then 8 or 10 rpm is better. These data are indicative when planning generalized indicators ”.

Henry Assel writes in his book Marketing: Principles and Strategy: "For businesses to operate profitably, their inventory must be turned over 25-30 times a year."

An interesting method for calculating the turnover rate is offered by Dobronravin E. He uses a Western design that takes into account many variable factors: the frequency with which the goods are ordered, the transportation time, the reliability of delivery, minimum dimensions order, the need to store certain volumes, etc.

What is the optimal number of inventory turnovers 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 in inventory management. results empirical research were summarized in Formula 5.

f in the proposed formula is a coefficient that summarizes the action of other factors that affect the theoretical number of revolutions. These factors are as follows:

the width of the assortment in storage, that is, the need to store slowly turning stocks for marketing purposes;
larger than required purchases in order to receive volume discounts;
requirements for a minimum purchase lot from a supplier;
unreliability of the supplier;
economic order size (EOQ) policy factors;
overstocking for promotion purposes;
using a delivery in two or more stages.

If these factors are at the usual level, then the coefficient should be around 1.5. If one or several factors have an extreme level, then the coefficient takes on the value of 2.0.

Example:

The store has factors (they are indicated in Table 6) applied for different suppliers.

There are several examples of how the turnover rate will look when the formula is applied (see Table 7).

This means that if on average we import goods 3 twice a month (0.5) and carry it for 1 month, while some factors (perhaps the supplier is unreliable) are imperfect, then the turnover rate can be considered 9.52. And for item 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 practice Western companies very different from Russian conditions - too much depends on logistics, purchase volumes and delivery times, supplier reliability, market growth and demand for the product. If all suppliers are local, and the 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, the 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 businesses working for the end consumer, and much less for enterprises producing products of group A (means of production) - due to the length of the production cycle.

Again, there is a danger of rude adherence to the standards: for example, you do not fit into the standard for turnover and begin to reduce the safety stock. As a result, there are failures in the warehouse, there is a shortage of goods and an unsatisfied demand. Or you start to reduce the order size - as a result, the costs of ordering, transportation and handling of goods increase. Turnover is on the rise, but availability problems remain.

The rate is a general indicator, and you should react and take action as soon as some negative trend is detected: for example, the growth of stocks outstrips the growth of sales, and simultaneously with the growth of sales, the turnover of stocks has decreased.

Then you need to evaluate all commodity goods within the category (perhaps some individual items are purchased in excess) and make informed decisions: look for new suppliers that can provide more short time deliveries, or stimulate sales for this type of product, or give it a priority place in the hall, or train sellers to advise buyers on this particular product, or replace it with another better-known brand, etc.

Buzukova E.A.,
assortment management consultant,
head of the Super-Retail club

"Sales business / Sales" / No. 5 May 2006 / Toolkit

Automate routine procurement processes,

make the buyer's job easier

the solution "Procurement Assistant" for 1C: Trade Management 10.3 and 11 will help.

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Concepts We Operate

Each manager operates with terms such as "inventory", "turnover", "exit", "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 take a closer look at the concept of turnover.

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

INVENTORY is a list of assets (goods, services) of the company, suitable for sale. If you are a retail and wholesaler, your inventory is not only the products on the shelves, but also the goods in stock, supplied, stored or received - anything that can be sold.

If we are talking about the GOODS STOCK, then these are goods in transit, goods in stock and goods in receivables (since the title to it remains with you until it is paid by the buyer, and theoretically you can return it to to your warehouse for subsequent sale). BUT: to calculate the turnover, goods in transit and goods in accounts receivable are not taken into account - only the goods in our warehouse are important to us.

AVERAGE STOCK (TZav) - the value that we need for the actual analysis. ТЗср for the period is calculated according to the formula 1.

Example

The calculation of the average inventory (TZav) for the year for a company that sells, for example, small household chemicals and household goods, is given in table. 1.
The average TK for 12 months will be $ 51,066.

There is also a simplified formula for calculating average balances:

ТЗср "= (balances at the beginning of the period + balances at the end of the period) / 2.

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

TABLE 1. Calculation of the average inventory

COMMODITY TURNOVER (T) - the volume of sales of goods and provision of services in monetary terms for a certain period of time. Sales 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 rendered services for the delivery of goods to our customers for 1,000 rubles.

Turnover and turnover ratio

The financial success of a company, the indicator of its liquidity and solvency directly depends on how quickly the funds invested in stocks turn into real money.

As an indicator of the liquidity of stocks, the RATIO OF INVENTORIES TURNOVER is used, which is most often referred to simply as turnover.

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

There are several types of inventory turnover:

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

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

STOCK TURNOVER (OB) or STOCK HANDLING RATE. The speed with which a product turns around (that is, it comes to the warehouse and leaves it) is an indicator that characterizes the efficiency of interaction between purchases and sales. There is also the term "TRANSPORTABILITY", which in this case is the same.

The turnover is calculated according to the classic formula:

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

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

THERE ARE THREE IMPORTANT POINTS before we start calculating the turnover.

1. If the company does not have stock, then it makes no sense to calculate the turnover: for example, we sell services (we run a beauty salon or give advice to the public) or we deliver to the buyer from the supplier's warehouse, bypassing our own warehouse (for example, an online book store).

2. If we unexpectedly realized a large project and sold an unusually large consignment of goods under 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 brought 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 the target delivery of the goods already sold in advance.

In either case, the store or company makes a profit, but the inventory in the warehouse remains intact.

In fact, we are only interested in the 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, the 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 there was a zeroing of goods in the warehouse, then these days should be deleted from the turnover analysis.

3. All calculations on turnover must be carried out in purchase prices. The 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 the available inventory (see formula 2).

Sometimes it is also called the average shelf life of a product in days. This will tell you how many days it takes to sell average stocks.

Example
Analyzed the commodity item "Hand cream", as an example in the table. 2 shows data on sales and stocks for half a year.
Let's calculate the turnover in days (for how many days we sell the average stock of goods). The average stock of the cream is 328 pieces, the number of days on sale is 180, the sales volume for six months was 1701 pieces.
Obdn = 328 pcs. (180 days / 1701 pcs. = 34.71 days.
The average stock of cream turns around in 34–35 days.

TABLE 2. Sales and stock data of the "Hand Cream" item

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

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

Example
Let's calculate the turnover in turnover (how many times the stock is sold for 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.
The stock is rotated on average 5 times per six months.

3. LEVEL OF STOCKS OF PRODUCTS (UTZ) - an indicator characterizing the supply of stocks to a store for a certain date, in other words, for how many days of trade (with the prevailing turnover) this stock will be enough (see formula 4).

Example
How many days will the available cream supply last?
Utz = 243 pcs. (180 days / 1701 pcs. = 25.71.
For 25-26 days.
You can calculate the turnover not in pieces or other units, but in rubles or another currency, that is, by value. But the final data will still be correlated with each other (the difference will be only due to the rounding of numbers) - see table. 3.

TABLE 3. Final data on the calculation of Obdn, Arr, Utz

What does turnover give?

The main purpose of the inventory turnover analysis is to determine those goods for which the speed of the "commodity-money-commodity" cycle is minimal in order to make a decision about their future fate.

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

TABLE 4. Analysis of the turnover ratio of two products

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 that of cognac. But it is inappropriate to compare products from different product categories - such a comparison does not give us anything. It is obvious that bread has one task in the store, while cognac has a completely different one, and it is possible that the store earns more on one bottle of cognac than from selling bread in a week.

TABLE 5. Analysis of the turnover rate of four products

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

the coefficient decreases - there is an overstocking of the warehouse;
the coefficient is growing or very high (shelf life is less than one day) - work "on wheels", which is fraught with the lack of goods in the warehouse.

If a company is forced to store goods of irregular demand in a warehouse, goods with a strongly pronounced seasonality, then achieving high turnover is not an easy task. To ensure customer satisfaction, we will be forced to have a wide range of seldom-sold items, which will slow down the overall inventory turnover. Therefore, the calculation of the turnover for all stocks in the company is incorrect. It will be correct to count by categories and by products within categories (commodity items).

Also for the store, the terms of delivery of goods play an important role: if the purchase of goods is made using its own funds, then the turnover is very important and indicative; if in a loan, then you invest your own funds to a lesser extent or do not invest at all, then the 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 the terms of sale, then first of all it is necessary to proceed from the volume of warehouse premises, and the turnover for such a store is the last indicator of importance.

Turnover and yield

It is important not to confuse the two concepts - turnover and yield.

TURNOVER is the number of goods turnover for the period.

CARRYING OUT - an indicator that tells how many days the goods leave the warehouse. If, when calculating, we do not operate with the average technical specification, but calculate the turnover of one batch, then in reality we are talking about leaving.

Example
On March 1, a batch of 1000 pencils arrived at the warehouse. On March 31st there were no pencils left in the warehouse (0). Sales are equal to 1000 pieces. It seems that the turnover is equal to 1, that is, once a month this stock has turned around. But it is necessary to understand that in this case we are talking about one party and about the time of its implementation. One batch does not turn around in a month, it "leaves".
If we calculate by 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 turnover of the average stock (500 pieces) will be equal to two periods. That is, if we delivered two batches of 500 pencils, each batch would be sold in 15 days. In this case, it is incorrect to calculate the turnover, because we are talking about one batch and the period when the pencils were sold to zero balance is not taken into account - perhaps this happened in the middle of the month.
To calculate the inventory turnover ratio, batch accounting is not needed. There is the arrival of the goods and the consumption of the goods. Given a period (for example, 1 month), we can calculate the average stock for the period and divide the sales volume by it.

Turnover rate

Very often you can hear the question: "What are the turnover rates? How is it correct?"

But in companies there is always the concept of "TURNOVER RATE" and each company has its own.
TURNOVER RATE is the number of days (or turnovers) during which, in the opinion of the firm's management, the stock of goods must be sold in order for the trade to be considered successful.

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

construction chemistry - 24;
varnishes, paints - 12;
plumbing - 12;
facing panels - 10;
roll floor coverings - 8;
ceramic tiles - 8.

Also, some financial analysts use Western standards.

Example
"Usually traders of industrial goods in Western enterprises have a turnover ratio of 6, if the profitability is 20-30%, - writes E. Dobronravin in the article" Turnover ratio and service level - indicators of the effectiveness of inventory. "- If profitability is 15%, the number of revolutions 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 are good, then 8 or 10 turns are better. summarizing indicators ".
Henry Assel writes in his book Marketing: Principles and Strategy: "For businesses to operate profitably, their inventories must be turned over 25-30 times a year."

An interesting method for calculating the turnover rate is offered by Dobronravin E. He uses a Western design that takes into account many variable factors: the frequency with which the goods are ordered, transportation time, delivery reliability, minimum order sizes, the need to store certain volumes, etc.

What is the optimal number of inventory turnovers 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 in inventory management. The results of the empirical study were summarized in Formula 5.

f in the proposed formula is a coefficient that summarizes the action of other factors that affect the theoretical number of revolutions. These factors are as follows:

the width of the assortment in storage, that is, the need to store slowly turning stocks for marketing purposes;
larger than required purchases in order to receive volume discounts;
requirements for a minimum purchase lot from a supplier;
unreliability of the supplier;
economic order size (EOQ) policy factors;
overstocking for promotion purposes;
using a delivery in two or more stages.

If these factors are at the usual level, then the coefficient should be around 1.5. If one or several factors have an extreme level, then the coefficient takes on the value of 2.0.

Example
The store has factors (they are indicated in Table 6) applied for different suppliers.
There are several examples of how the turnover rate will look when the formula is applied (see Table 7).

TABLE 6. Store Factors for Suppliers

TABLE 7. Calculation of the turnover rate

But the practice of Western companies is very different from Russian conditions - too much depends on logistics, procurement volumes and delivery times, supplier reliability, market growth and demand for goods. If all suppliers are local, and the 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, the 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 Group A products (means of production) - due to the length of the production cycle.

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

The period of turnover of inventories is the formula for the balance sheet. Inventory turnover in days. Inventory turnover period

Characteristics of the indicator

Stock parameters

Conclusion

Read also

Example:

Formulas for calculating turnover

Turnover in days

Example:

Turnover at times

Example:

Product inventory level

Example:

What does turnover give?

Turnover and yield

Turnover rate

Example:

Example:

Buzukova E.A., assortment management consultant, head of the Super-Retail club

"Sales business / Sales" / No. 5 May 2006 / Toolkit

Automate routine procurement processes,

make the buyer's job easier

the solution "Procurement Assistant" for 1C: Trade Management 10.3 and 11 will help.

Concepts We Operate

Turnover and turnover ratio

Formulas for calculating turnover

TABLE 2. Sales and stock data of the "Hand Cream" item

TABLE 3. Final data on the calculation of Obdn, Arr, Utz

What does turnover give?

TABLE 4. Analysis of the turnover ratio of two products

TABLE 5. Analysis of the turnover rate of four products

Turnover and yield

Turnover rate

TABLE 6. Store Factors for Suppliers

TABLE 7. Calculation of the turnover rate

Buzukova E.A.,
assortment management consultant,
head of the Super-Retail club