How to calculate the inventory turnover period. The turnover in days shows how many days it takes to sell the average stock

Inventory turnover is a coefficient that shows the number of turnovers for a period. The article contains formulas and calculation examples.

What is inventory turnover

The turnover ratio of TMZ shows the frequency with which funds invested in operational activities are returned to the company.

Turnover is an indicator that makes it clear how quickly the funds invested in business processes of creating value turn into real money.

Download and take to work:

How to calculate the turnover in days

Inventory turnover in days - formula:

Alternative calculation of the turnover period

Dob (Z) = 365 (days a year) / inventory turnover ratio (s) (Goiter, SMob, NZPob, Tob)

Turnover rate

The inventory turnover rate is the minimum required inventory requirement. Inventory requirements are determined based on the production budget or cost data for the period is taken. To calculate the demand for inventory, the following formula is used:

Standard (raw materials and materials) = (Z / T) x Ncm,

where З is the cost of raw materials and supplies (from the production budget),

T - days in a calendar period, Ncm - stock rate (number of days for which the stock is formed), days.

Ncm = Current stock + Insurance stock

The current stock is half of the interval between deliveries of raw materials (P / 2), the insurance stock is a quarter of the interval between deliveries (P / 4). It is possible to take into account the transport stock.

What factors affect the turnover of stocks of raw materials and supplies

The following factors can change the rate of turnover of stocks of raw materials and supplies:

• the need to store slow-moving items in the warehouse;
• the provision of discounts by suppliers only from a certain volume of the order;
• the requirement of suppliers for the minimum purchase lot;
• bad faith fulfillment by the supplier of the terms of the contract;
• the cost of placing an order and the cost of its storage;
• the need for safety stocks to ensure a continuous production process;
• the ability to split the payment into several parts (advance payment - after receiving the order, full payment - after arrival at the warehouse).

An example of calculating and analyzing turnover

Let's define the effect for the company from changes in inventory turnover.

Table 1... Operating data of the production company Molotok JSC for 2019

CMy – Average inventory turnover, in days - 60 days,

WIPy - Average warehouse turnover, in days - 45 days,

Пy - Average turnover of goods (finished goods) - 33 days.

Inventory turnover period = 60 + 45 + 25 = 138 days

The company has upgraded its main production line and improved supply chain logistics. According to the assurances of management, in 2019, modernization and improvement will increase the rate of turnover of inventories in 1.8 times.

Let's evaluate the effect of the improvements. First, we will determine the number of stocks by type in 2019, and their turnover (table 2).

table 2... Inventory turnover by type

Stock item
Raw materials and supplies
Finished products
Total 2019

Inventory turnover rate is 24.9.

Let us determine the economic effect for the enterprise from the modernization and improvement of technology (increasing the turnover of inventories by 1.8 times) in 2019:

CMz – inventory turnover, turnover - 6 x 1.6 = 9.6 times,

WIPz - warehouse turnover, revolutions - 8 x 1.6 = 12.8 times

Пz - turnover of goods (finished products), turnover - 17.4 times.

Inventory turnover = 9.6 + 12.8 + 17.4 = 39.8 times

Table 3... Calculation results

Stock item			Turnover (number of revolutions)
Raw materials and supplies
Finished products
Total 2019

According to the calculations, an increase in inventory turnover by 1.8 times will lead to a decrease in inventory surplus in 2019 by 943.4 thousand rubles. (2,519.6 - 1,576.2), which will lead to the release of funds frozen in stocks and, possibly, to a reduction in the company's working capital.

Conclusion

Economic benefits derived from effective inventory management:

1. Reducing production losses due to lack of raw materials and materials.
2. Acceleration of the turnover of the main categories of stocks.
3. Minimization of an oversupply of inventories, which increases the costs of operations and freezes the scarce money of the business.
4. Reducing the risk of spoilage and obsolescence of goods.
5. Reducing the cost of warehousing inventory.

Lack of inventory has a direct impact on the rate of inventory turnover:

• delays in the supply of stocks (raw materials and supplies) and, as a result, an increase in the duration of the operating cycle, an increase in costs, and hence a drop in inventory turnover;
• decrease in sales volumes due to insufficient inventory turnover.

The economic effect associated with excess inventory also has a direct impact on the rate of inventory turnover:

• physical, functional or obsolescence of stocks;
• an increase in the cost of storing surplus stocks (warehouse turnover falls);
• an increase in property tax due to an increase in the volume of inventories.

I like

122

Turnover - 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 must not forget that a decrease in stock increases the risks of a shortage 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. Average inventory 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 turnover rate acceptable for the implementation of the strategic goals of the Company and evaluate 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 of 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 greater 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

Very often confusion arises here when calculating turnover. Many people think
a) not the average stock, but the stock for "today". This is the level of stocks, 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, since 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 ​​of 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 makes an individual decision on 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, the following also - the exclusion of zero balances complicates the system for setting the turnover rate and the analysis its implementation.

Formulas for calculating turnover

The turnover is calculated in days or times.

1. Turnover in days shows how many days it takes to sell an average stock. It is calculated by the formula:

2. Turnover at times says how many times during the period the product "turned around", sold. Calculated by the formulas:

About times = 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 results of measurement 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? Do you need to find out what caused such a poor turnover - 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 between 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 goods with low turnover, but this should 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” together with illiquid assets both a new product, and an accompanying product, a component or a fashion product. 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 margin - 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 purchase goods in large quantities. You need to understand that this is the price of a business ...

Notes (edit)

The article was prepared using the materials of the article of the assortment management consultant E.A. Buzukova. "Simple and familiar to all turnover"

DEFINITION

Turnover indicator is the most important value that is needed when planning the required amount of stocks. Using this factor, you can determine the number of inventory turnovers for the selected period.

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

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

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

• Indicator of net sales (income),
• Cost of goods sold,
• Inventory value (for example, the average for the year in the case of calculating the annual inventory turnover).

The formula for the balance sheet turnover ratio

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

KOZ = OR / Zsr.,

В– proceeds from the sale of products (rubles);

Zsr. - the average amount of reserves (rubles).

When calculating the inventory turnover, the accounting statements of the enterprise are used. The formula for the balance sheet turnover ratio is as follows:

KOZ = line 2110 / line 1210

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

Formula for calculating the average inventory:

Зср = (Знп + Зкп) / 2

Zsr = (1210np + 1210kp) / 2

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

Formula of inventory turnover through cost price

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

KOZ = Seb / Zsr,

Here KOZ is the inventory turnover ratio;

Seb - the cost of goods sold (rubles);

Зср - average cost of inventories (rubles).

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

Standard value of turnover

The inventory turnover indicator does not have specific standards that would be accepted by all enterprises. The coefficient is most often used for calculation and comparison for enterprises of the same industry, as well as for tracking dynamics for one specific enterprise.

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

• Excess of accumulated inventory,
• Low efficiency of inventory management,
• Excess of unusable material, etc.

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

For enterprises operating with a high level of profitability, low turnover is inherent, and for enterprises with a low rate of profitability, on the contrary.

Examples of problem solving

EXAMPLE 1

EXAMPLE 2

The task	Determine and compare the turnover indicators of the enterprise for 2 months of work, if this month there is an average stock of material of 1600 pieces, in the past month - 1250 pieces. Sold this month 12,000 pieces, last month - 20,000 pieces.
Solution	Зср (1 month) = 1600 * 31/1 200 = 41.3 days W wed (2 month) = 1250 * 30/2000 = 18.8 days Conclusion. Thus, we have determined that an enterprise needs an average of 41 days to sell an average stock of products. Last month, this indicator was at the level of 19 days. This situation indicates the need to reduce the decrease in the amount of imported material or increase the number of sales. It can be concluded that the material is turning around more slowly this month than last.
Answer	41.3 days, 18.8 days

Let's analyze. This ratio is included in the group of indicators of the business activity of the enterprise (turnover). The coefficients from this group show the intensity (rate of turnover) of the use of assets or liabilities. With the help of them, you can find out how actively the company is conducting its activities. Hence the second name of the group - Business Activity. In foreign literary sources, this coefficient is called Inventory turnover.

Inventory turnover ratio... Economic meaning

The coefficient shows the efficiency of inventory management at the enterprise. It determines how many times during the analyzed period, the company has used its reserves. In other words, the ratio shows the rate at which inventory is produced and discharged from the warehouse of the enterprise. It is a measure of the effectiveness of the purchasing department (warehouse) and the sales department.

Analysis of the inventory turnover ratio

How to analyze the value of this coefficient? If the value decreases (▼), it indicates that:

• the company accumulates surplus stocks,
• the company has poor sales.

If the value of the coefficient increases (▲), it means that:

• the enterprise has an increase in the turnover of warehouse stocks,
• sales are increasing.

High values ​​of this coefficient are also undesirable for an enterprise, since it is often associated with a constant shortage of goods in warehouses, which leads to customer losses and interruptions in the production process. It is necessary to find the golden line for each enterprise.

Inventory turnover ratioand its synonyms

The coefficient has synonyms that often come across in the economic literature. So that you do not have any difficulties with the interpretation of the ratios, below are the synonyms for the inventory turnover ratio:

• Inventory turnover ratio,
• Inventory turnover,
• Inventory turnover,
• Inventory turnover ratio,
• Material assets turnover ratio,
• Inventory turnover ratio,

Inventory turnover ratio... The formula for calculating the balance sheet and IFRS

The formula for calculating the inventory turnover ratio is as follows:

Inventory Turnover Ratio = Sales Revenue / Average Inventory

The cost of sales is sometimes used as the cost of sales.

To calculate the coefficient, the availability of public statements of the enterprise is sufficient. According to RAS, the calculation formula is as follows:

Inventory turnover ratio = line 2110 / (line 1210np. + Line 1210kp.) * 0.5

N.p. - the value of line 1210 at the beginning of the period.
Kp. - the value of line 1210 at the end of the period.

Remember to divide your start and end stocks by 2 to find the average of your plant's stocks.

The reporting period may not be a year, but, for example, a month, a quarter.

According to the old form of accounting, the calculation formula will be as follows:

Inventory turnover ratio = line 10 / (line 210np + line 210kp) * 0.5

Sometimes, as mentioned above, instead of Revenue (page 10), the cost of goods sold (page 20) is used.

Transformation of the Inventory Turnover Ratio into Inventory Turnover

Along with the coefficient, the Inventory turnover indicator (inventory turnover period) is used. It reflects the number of days required to convert stocks into money supply. The transformation formula for the inventory turnover ratio during the inventory turnover period is as follows:

Inventory turnover (in days) = 360 / Inventory turnover ratio

Sometimes 365 days are used in the formula instead of 360 days. The economic meaning of inventory turnover is that it determines how many days a company will have enough stock in the warehouse.

Two approaches to calculating the inventory turnover ratio according to IFRS

There are two approaches to calculating the ratio according to IFRS (international financial reporting system): the first approach takes into account the Revenue in the formula, and the second takes into account the cost of goods sold. As you most likely noticed, in Russian practice, there are also these two approaches to calculating the coefficient.

I will give everything in the form of a comparative table.

1 approach to calculating Goats	2 approach to calculating Goats
Inventory turnovers = Sales / Inventories	Inventory turnovers = Cost of goods sold / Average Inventory
In this approach Sales - Revenue, Inventories - inventory at the end of the reporting period	Cost of goods sold - cost of goods sold, Average Inventory - average inventory value for the reporting period (amount at the beginning and end / 2)

The discrepancy in the results for these two approaches will be significant. This is due to the fact that the Revenue significantly exceeds the value of the Cost of products sold.

Working capital cycle (money cycle,cashconversioncycle)

Inventory turnover is closely related to working capital cycle... What is the money cycle? This is the number of days that elapses from the date of purchase of raw materials and materials for production for cash until the sale of manufactured goods. The working capital cycle (money cycle) is measured in days and determines the efficiency of the company's working capital management.

The formula for calculating the working capital cycle:

Working capital cycle (money cycle) = Inventory turnover (in days) + Accounts receivable turnover (in days) - Accounts payable turnover (in days)

The shorter the cycle, the faster the company returns money from circulation. There is no optimal cycle value, it all depends on the industry specifics.

Video lesson: “Calculation of key indicators of business activity for OJSC“ Gazprom ”

Inventory turnover ratio... Calculation based on the example of OJSC ALROSA

Calculation of the inventory turnover ratio for OJSC ALROSA. Balance

Calculation of the inventory turnover ratio for OJSC ALROSA. Financial results

Data on the balance sheet of OJSC ALROSA are taken from the official website of the company. Let's calculate the inventory turnover ratio for the year. Let's take 4 periods 3.4 for 2013 and 1.2 for 2014. This will cover one calendar year.

Calculation of stock turnover ratios for OJSC ALROSA:

Inventory turnover ratio 2013-4 = 138,224,744 / (43416382 + 39598628) * 0.5 = 3.3
Inventory turnover ratio 2014-1 = 41503568 / (39598628 + 37639412) * 0.5 = 1
Inventory turnover ratio 2014-2 = 81551030 / (37639412 + 41581870) * 0.5 = 2

The values ​​of the inventory turnover ratio for OJSC ALROSA are not constant, there is no clear tendency towards growth or decline. For a more detailed analysis, it is desirable to determine the average value of the coefficient for the industry.

Inventory turnover ratio... Standard

The coefficient does not have a specific standard value. Each industry will have its own average coefficient values. The analysis of the coefficient can be carried out as follows:

• Dynamic analysis. Calculate the values ​​of the coefficient for our enterprise for several periods and build a time series of its changes. This will allow you to determine the trend of its change.
• Comparative analysis... Calculate the value of the coefficient for the industry on average, as well as highlight the leader's enterprise by the coefficient. This will make it possible to determine our place in comparison with the enterprises of the industry as a whole.

Summary

Let's summarize the analysis of the inventory turnover ratio. It shows the intensity of the use of reserves by the enterprise. The higher this coefficient, the more efficiently the company operates.

Inventory turnover

Buzukova in the magazine "Sales business / Sales", June 2006

BASIC CONCEPTS

Everything that lies in our warehouse or moves towards it is a circulating asset of our store. But these are also frozen funds that we put in the warehouse, eagerly awaiting their return. If the product is in stock, it 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 the turnover of a product 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 desired product in the warehouse.

To understand how long we “take out” money from circulation and invest it in stocks, we analyze the turnover of inventories.

Each manager operates with such terms as "inventory", "turnover", "exit", "turnover", "turnover ratio" and so on. 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. The item 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, and so on).

Inventory- This is a list of assets (goods, services) of the company, suitable for sale. If you are a retail or wholesaler, therefore, not only are the goods on the shelves your inventory, 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 the goods remains with you until the goods are paid by the buyer and theoretically you can return them to your warehouse for subsequent sale) ... BUT: to calculate the turnover, the goods in transit and the goods in the receivables are not counted - only the goods in our warehouse will be important to us.

Average inventory (TZav) - the value that we need for the actual analysis. TZsr for the period is calculated using the following formula:

TKWed =TK 1 /2 + TK 2 + TK 3 + TK 4 + … TK n /2

n – 1

ТЗ1, ТЗ2, ... ТЗn - the amount of inventory for individual dates of the analyzed period (in rubles, dollars, etc.)

n is the number of dates in the period.

Example : calculation of the average inventory (TZav) for a year for a company selling, for example, small household chemicals and household goods:

month

January

February

March

April

June

July

August

September

October

November

December

the amount of inventory on the 1st day of the month (USD)

serial number of the period

formula designation

data in formula

TK cf =22940 + 40677 + 39787 + 46556 + 56778 + 39110 + 45613 + 58977 + 56001 + 56577 + 71774 + 26 939 =

= 561729/11 = 51,066 dollars.

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, ТЗср` will be equal to (45880 + 53878) / 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 the 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 for 39,000 rubles and also rendered services for the delivery of goods to our customers for 1,000 rubles.

TURNOVER AND TURNOVER COEFFICIENT

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".

The turnover ratio 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:
“- the turnover of each item in quantitative terms (by pieces, by volume, by weight, etc.);
- the turnover of each item by value;
- the turnover of a set of items or the entire stock in quantitative terms;
- the turnover of a set of positions or the entire stock at a cost ”.

For us, two indicators will be relevant - the turnover in days and the turnover in the number of revolutions.

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

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).

In the future, when we say "turnover" and "turnover ratio", we will mean the same thing - this is the number of turnovers in times or days of the average inventory balance for a certain reporting period.

Three important points before we start calculating the turnover.

1. If the company does not have stocks, then it makes no sense to calculate the turnover: for example, if we trade in services (beauty salon or public consultations) or supply the buyer from the supplier's warehouse, bypassing our own warehouse (for example, an online bookstore).

2. If we unexpectedly implemented a large project and sold an unusually large batch of goods 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 participate in the calculations, since this 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:

which came or was sold during the period under review (there was any movement). 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. 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 - how many days it takes to sell existing inventory.

About d = Average inventory (TK avg) x number of days (D)

Sales volume, aka turnover for this period (T)

Sometimes it is also called "the average shelf life of goods 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, the data on sales and stocks for six months are given:

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

About d = 328 pieces x 180 days / 1701 pieces = 34.71.

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

2. Turnover in times - how many turnovers a product makes over a period.

About time = Sales volume, it is also the turnover for the period (T)

Average inventory for the period (TZav)

About time = Days (D)

About d

The higher the turnover of the company's stocks, the more efficient its activities are and 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: Rev = 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. Product inventory level (Utz)- an indicator characterizing the supply of stocks in the store for a certain date. It shows how many days of trading (given the prevailing turnover) this stock will last.

Utz = Inventory at the end of the analyzed period (TZ) x number of days (D)

Trade turnover for the period (T)

Example: How many days will the available cream supply last?

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

For 25-26 days, the existing stock of cream will be enough for us.

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

Name							Sales in 6 months (180 days)	Average stock	About d (storage in days)		Level stocks
Hand cream
Sales (pieces)
Stock balance (pieces)
Average purchase price (RUB)
Sales (rub)
Remaining stock (RUB)

WHAT GIVES TURNOVER?

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 analyzing the turnover ratio of two products that are part of the assortment of a grocery store - bread and cognac.

Item name								Weekly sales	Average stock	About d (storage in days)
White sliced ​​loaf
Sales (pieces)
Stock balance (pieces)
Elite cognac in gift box
Sales (pieces)
Stock balance (pieces)

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.

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.

Item name								Weekly sales	Average stock	About days (storage in days)
Elite cognac ** in a gift box
Sales (pieces)
Stock balance (pieces)
Whiskey ** Scotland 18 years
Sales (pieces)
Stock balance (pieces)
Vodka ** currant in a tube elite
Sales (pieces)
Stock balance (pieces)
Tequila ** extra age with caterpillar in tuba
Sales (pieces)
Stock balance (pieces)

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, and vodka, despite the fact that that its sales are twice as large as that of tequila, has a lower turnover and requires adjusting the stock - it may be necessary to import vodka more often, but in smaller batches.

In addition, it is important to track the dynamics of changes in turnover in turnover (OB p) - 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 (About p), taking into account the following factors:

The coefficient decreases - there is an overstocking of the warehouse. The coefficient grows or is 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 for a product is growing all the time, and we do not have time to bring the product and sell it “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 a 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).

The terms of delivery of goods also play an important role for the store: if the purchase of goods comes from its own funds, then the turnover is very important and indicative. If the purchase of goods is on credit, 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 most important indicator.

turnover and yield

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

Turnover- how many revolutions the product makes during the period.
Leaving- how many days it will take for something to leave the warehouse. Leaving is a concept that is more often used in logistics, but often in trade they call withdrawal - turnover and confuse these two concepts. If, when calculating, we do not operate on the average TK, but we calculate the turnover of one batch, then in reality we are talking about withdrawal.

For example, on March 1, a batch of 1000 pencils arrived at the warehouse. On March 31st there are 0 pencils left in the warehouse. 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 2 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 a concept "Turnover rate" and each company has its own.

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

Each industry has its own norms. Some companies have different norms for different groups of goods, so our trading company used the following norms (turnover per year):
Construction chemistry - 24
Varnishes, paints - 12
Plumbing - 12
Facing panels - 10
Rolled 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 balance of goods in the store is made up of the turnover rate plus the safety stock.

Also, some financial analysts use Western standards:

“Usually traders of industrial goods in Western enterprises have a turnover rate of 6, if the profitability is 20 - 30 percent. If the profitability is 15 percent, the number of revolutions is approximately 8. If the profitability is 40 percent, then a solid profit can be obtained with 3 revolutions per year. As noted earlier, it doesn't follow that if 6 rpm is good, then 8 or 10 rpm is better. These data are indicative when planning generalized indicators ”.
Henry Assel in his book Marketing: Principles and Strategy writes: "... in order for businesses to operate profitably, their inventory must be turned over 25-30 times a year."

An interesting method for calculating the turnover rate suggested by Evgeniy Dobronravin. It uses Western design, which 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 the following formula:

Expected number of revolutions= 12 / (f * (OF + 0.2 * L))
OF - the average frequency of an order in months (i.e. the time interval between placing orders with a supplier)
L- the average delivery period in months (i.e. the time between placing an order and receiving the goods)
f- 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, i.e. the need to store slow-moving inventory for marketing purposes is larger than required, purchases in order to receive discounts for the volume of the requirement of the minimum purchase lot from the supplier supplier unreliability policy factors economic order size (EOQ) overstocking for promotional purposes use delivery in two 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 the following factors applied to different vendors:

Factors	Level factor a by product 1	Level factor a by product 2
assortment width in storage	fine	fine
larger than required purchases in order to receive volume discounts	fine
minimum purchase lot requirements	fine
supplier unreliability	fine
EOQ Economy Sizing Policy Factors	fine	fine
overstocking for promotion purposes	fine	fine
use of delivery in two stages	fine	fine

There are several examples of what the turnover rate will look like when the formula is applied:

Data for calculating the turnover rate	Item 1	Item 2	Item 3	Item 4	Item 5	Item 6
OF- average frequency of placing an order (in months)
L- average delivery period (months)
f- coefficient that summarizes the action of other factors
Turnover rate 12 / (f * (OF + 0.2 * L))

This means that if, on average, we import product No. 3 twice a month (0.5) and carry it for 1 month, despite the fact that some of our factors (perhaps the supplier is unreliable) are not ideal, then the turnover rate can be considered 9.52 ... And for item No. 5, which we rarely import, it takes a long time and the influencing factors are very far from ideal, it is better to set a turnover rate of 1, 67 and not demand too much from its sale.

But the practice of Western companies is very different from the 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 will be normal.

These indicators largely depend on the characteristics of the industry, the size of the enterprise, the product, therefore, in this case, an expert opinion and statistical data are required. Turnover rates will be higher for small businesses working for the end user; for enterprises that manufacture products of group "A" (means of production) - much less because of the length of the production cycle.

Again, there is a danger of rough adherence to the regulations: for example, you do not fit into the turnover standard and begin to reduce the safety stock. As a result, there are dips in the warehouse, a shortage of goods and an unsatisfied demand. Or we begin to reduce the size of the order - as a result, the costs of ordering, transportation and handling of goods increase. Turnover is on the rise, but availability problems remain. We will talk about optimal ordering in the next chapter. Of course, all parameters must be linked to each other - turnover, optimal order, coefficient of variation, safety stock, and so on.

The rate is a general indicator, and it is necessary to react 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 look at all the products within the category (perhaps some individual items are purchased in excess) and make informed decisions: look for new suppliers who can provide shorter delivery times or stimulate sales for this type of product or give this product a priority place in the hall or train sellers to advise buyers on this particular product or replace with another better-known brand, and so on.

1. Inventory turnover. Magazine "Warehouse complex" No. 4-2004

2. Turnover ratio and service level - indicators of the effectiveness of inventory, http: // www.

3. Henry Assel... Marketing: principles and strategy. M. "Infra - M." 2001

4. Why Is Inventory Turnover Important? By Jon Schreibfeder.

References:

1. WITH., course "Financial Management" // www.

2. , Merchandising. 2nd ed. - SPb .: Peter, 2004

3. Book of the store director. 2-ed., Improved. and additional / Ed. - SPb .: Peter, 2006

4. , Analysis of the activities of the trading enterprise. Turnover, Sarychev's Implementation Center, http: // www. vcs. ru

5. , Logistics and Marketing (Marketing Logistics). - M .: "Economics", 2005

6. Schreibfeder J... Effective inventory management. - M .: Alpina Business Books, 2005.

It is also called the "pre-computer" formula.

The comparison does not include periods when there is zero stock in the warehouse. The stock is calculated not from seven days, like with bread, but from five days when the cognac was present in the warehouse.

It reminds of a common joke "on average in a hospital" - meaning that the average temperature in a hospital is 37 degrees, which does not really mean the true state of affairs.

This is the very rate of turnover.