Inventory Turn Rates

Yahoo Archive
1
Thanks for all of the replies on this subject.

As usual, somebody out there seems to have the answer to just about every
question!!!

-----Original Message-----
From: Mike Lowe [mailto:MLowe@...]
Sent: Monday, September 22, 2003 1:50 PM
To: vantage@yahoogroups.com
Subject: RE: [Vantage] Inventory Turn Rates


Todd,

Found this a few years ago...

Mike Lowe
=======================================================

Inventory turnover is calculated with the following formula:

<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Cost of Goods Sold from Stock Sales during the Past
12 Months /

Average Inventory Investment during the Past 12
Months



There are several things to keep in mind when calculating turnover rates:



1.Only consider cost of goods sold from stock sales which are filled from
warehouse inventory. Non-stock items and

direct shipments are not included. Sure, these sales are important, but
don't involve your warehouse stock (i.e. your

investment in inventory).



2.The cost of goods sold figure in the formula includes transfers of
stocked products to other branches and quantities of

these products used for internal purposes such as repairs and
assemblies.



3.Inventory turnover is based on the cost of items (what you paid for
them) not sales dollars (what you sold them for).



Inventory turnover depends on the average value of stocked inventory. To
determine your average inventory investment:



1.Calculate the total value of every product in inventory (quantity
on-hand times cost) every month, on the same day of the

month. Be sure to be consistent in using the same cost basis (average
cost, last cost, replacement cost, etc.) in calculating

both the cost of goods sold and average inventory investment.



2.If your inventory levels tends to fluctuate throughout the month,
calculate your total inventory value on the first and

fifteenth of every month.



3.Determine the average inventory value by averaging of all of inventory
valuations recorded during the past 12 months.

-----Original Message-----
From: Todd Anderson [mailto:tanderson@...]
Sent: Monday, September 22, 2003 11:43 AM
To: 'vantage@yahoogroups.com'
Subject: [Vantage] Inventory Turn Rates


Does anyone have the "Correct" formula for calculating inventory turn rates?

Thanks,

Todd Anderson


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2
Does anyone have the "Correct" formula for calculating inventory turn rates?

Thanks,

Todd Anderson
3
Inventory turnover= Cost of goods sold/Average inventory

Where Average Inventory= (Beginning inventory + ending inventory)/ 2

This assumes that beginning and ending inventory are representative of the
year. quarterly average could be used if there is a cyclical nature to the
business.

-----Original Message-----
From: Todd Anderson [mailto:tanderson@...]
Sent: Monday, September 22, 2003 2:43 PM
To: 'vantage@yahoogroups.com'
Subject: [Vantage] Inventory Turn Rates


Does anyone have the "Correct" formula for calculating inventory turn rates?

Thanks,

Todd Anderson


Yahoo! Groups Sponsor

ADVERTISEMENT

<http://rd.yahoo.com/M=194081.3897168.5135684.1261774/D=egroupweb/S=17050071
83:HM/A=1732161/R=0/SIG=11p5b9ris/*http://www.ediets.com/start.cfm?code=3050
9&media=atkins> click here

<http://us.adserver.yahoo.com/l?M=194081.3897168.5135684.1261774/D=egroupmai
l/S=:HM/A=1732161/rand=879006260>

Useful links for the Yahoo!Groups Vantage Board are: ( Note: You must have
already linked your email address to a yahoo id to enable access. )
(1) To access the Files Section of our Yahoo!Group for Report Builder and
Crystal Reports and other 'goodies', please goto:
http://groups.yahoo.com/group/vantage/files/.
<http://groups.yahoo.com/group/vantage/files/.>
(2) To search through old msg's goto:
http://groups.yahoo.com/group/vantage/messages
<http://groups.yahoo.com/group/vantage/messages>
(3) To view links to Vendors that provide Vantage services goto:
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<http://groups.yahoo.com/group/vantage/links>

Your use of Yahoo! Groups is subject to the Yahoo! Terms of Service
<http://docs.yahoo.com/info/terms/> .




[Non-text portions of this message have been removed]
4
One generally accepted definition is:

Annual Sales in Dollars / Average on hand balance in Dollars

Fancier stuff like discounting for cost of capital
and so on can be done .. if you enjoy long meetings
and intricate puzzles ..

-----Original Message-----
From: Todd Anderson [mailto:tanderson@...]
Sent: Monday, September 22, 2003 1:43 PM
To: 'vantage@yahoogroups.com'
Subject: [Vantage] Inventory Turn Rates


Does anyone have the "Correct" formula for calculating inventory turn rates?

Thanks,

Todd Anderson


Useful links for the Yahoo!Groups Vantage Board are: ( Note: You must have
already linked your email address to a yahoo id to enable access. )
(1) To access the Files Section of our Yahoo!Group for Report Builder and
Crystal Reports and other 'goodies', please goto:
http://groups.yahoo.com/group/vantage/files/.
(2) To search through old msg's goto:
http://groups.yahoo.com/group/vantage/messages
(3) To view links to Vendors that provide Vantage services goto:
http://groups.yahoo.com/group/vantage/links

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
5
Todd,

Found this a few years ago...

Mike Lowe
=======================================================

Inventory turnover is calculated with the following formula:

<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Cost of Goods Sold from Stock Sales during the Past 12 Months /

Average Inventory Investment during the Past 12 Months



There are several things to keep in mind when calculating turnover rates:



1.Only consider cost of goods sold from stock sales which are filled from warehouse inventory. Non-stock items and

direct shipments are not included. Sure, these sales are important, but don't involve your warehouse stock (i.e. your

investment in inventory).



2.The cost of goods sold figure in the formula includes transfers of stocked products to other branches and quantities of

these products used for internal purposes such as repairs and assemblies.



3.Inventory turnover is based on the cost of items (what you paid for them) not sales dollars (what you sold them for).



Inventory turnover depends on the average value of stocked inventory. To determine your average inventory investment:



1.Calculate the total value of every product in inventory (quantity on-hand times cost) every month, on the same day of the

month. Be sure to be consistent in using the same cost basis (average cost, last cost, replacement cost, etc.) in calculating

both the cost of goods sold and average inventory investment.



2.If your inventory levels tends to fluctuate throughout the month, calculate your total inventory value on the first and

fifteenth of every month.



3.Determine the average inventory value by averaging of all of inventory valuations recorded during the past 12 months.

-----Original Message-----
From: Todd Anderson [mailto:tanderson@...]
Sent: Monday, September 22, 2003 11:43 AM
To: 'vantage@yahoogroups.com'
Subject: [Vantage] Inventory Turn Rates


Does anyone have the "Correct" formula for calculating inventory turn rates?

Thanks,

Todd Anderson


Yahoo! Groups Sponsor

ADVERTISEMENT
<http://rd.yahoo.com/M=194081.3897168.5135684.1261774/D=egroupweb/S=1705007183:HM/A=1732161/R=0/SIG=11p5b9ris/*http://www.ediets.com/start.cfm?code=30509&media=atkins>
<http://us.adserver.yahoo.com/l?M=194081.3897168.5135684.1261774/D=egroupmail/S=:HM/A=1732161/rand=879006260>

Useful links for the Yahoo!Groups Vantage Board are: ( Note: You must have already linked your email address to a yahoo id to enable access. )
(1) To access the Files Section of our Yahoo!Group for Report Builder and Crystal Reports and other 'goodies', please goto: http://groups.yahoo.com/group/vantage/files/.
(2) To search through old msg's goto: http://groups.yahoo.com/group/vantage/messages
(3) To view links to Vendors that provide Vantage services goto: http://groups.yahoo.com/group/vantage/links

Your use of Yahoo! Groups is subject to the Yahoo! Terms of Service <http://docs.yahoo.com/info/terms/> .




[Non-text portions of this message have been removed]