What problems should be solved by enterprises to improve inventory turnover?

If you want to improve the inventory turnover rate, you need to know that the inventory turnover rate affects the cost of sales and the average inventory; Inventory turnover can be improved by reducing average inventory or increasing cost of sales; So how do you lower your average inventory? It is necessary to improve the budget accuracy of inventory, reduce the inventory at the end of the month and the beginning of the month, or transfer the inventory to the top merchant. Only by analyzing in this way can we find the essence of the problem.

The watchtower owner. Shenyang Kingdee Finance will answer for you.

If the inventory is not sold, it is the inventory; If the inventory has been sold, it will be converted into the cost of goods sold.

Cost of goods sold is the conversion of the value of inventory sold.

Inventory is generally held for the purpose of selling.

Inventory turnover ratio is the ratio of the cost of goods sold to the average inventory balance of an enterprise in a certain period. It is used to reflect the turnover speed of inventory, that is, whether the liquidity of inventory and the amount of inventory capital occupied are reasonable, so as to promote enterprises to improve the efficiency of capital use and enhance the short-term solvency of enterprises while ensuring the continuity of production and operation.

Inventory turnover rate is one of the important indicators in the analysis of enterprise operating capacity, and is widely used in enterprise management decision-making. Inventory turnover rate can not only be used to measure the efficiency of inventory operation in all aspects of enterprise production and operation, but also used to evaluate the operating performance of the enterprise and reflect the performance of the enterprise.

Inventory turnover rate is a supplementary description of the turnover rate of current assets, through the calculation and analysis of inventory turnover rate, the turnover rate of inventory assets in a certain period of time can be determined, which is a measure to reflect the balance efficiency of enterprise purchase, production and sales. The higher the inventory turnover rate, the stronger the liquidity of the inventory assets of the enterprise, and the faster the turnover of inventory and the capital occupied on the inventory.

Inventory turnover rate, also known as inventory turnover rate, is a comprehensive index to measure and evaluate the management status of each link of an enterprise, such as purchasing inventory, putting it into production, and recovering sales. It is the ratio obtained by dividing the cost of goods sold by the average inventory, or the number of inventory turnovers, and the inventory turnover rate expressed in time is the inventory turnover days. It is calculated as follows:

Inventory turnover ratio (times) = cost of goods sold Average inventory balance.

There is also an inventory turnover ratio (times) = operating income and average inventory balance, which is mainly used for profitability analysis).

If an enterprise's inventory turnover rate is low, it means that the following situations may have occurred in the enterprise: inventory turnover is too slow, inventory is outdated, sales estimates are too high, and the balance between sales and inventory cannot be maintained.

1. Inventory turnover is too slow.

Generally speaking, the slower the inventory turnover, the higher the level of inventory occupancy, the lower the liquidity, and the slower the conversion of inventory into cash or accounts receivable. As a result, a reduction in inventory turnover will reduce the ability to improve the company's liquidity.

2. Outdated inventory.

Obsolete inventory refers to inventory that is at the end of a product's life cycle. This stock has not been **or used for a long time and will not be**. This type of inventory has to be written down or written off, which can cause huge losses to the company.

3. The sales estimate is high.

The high sales estimate refers to the fact that the ** of the product is misjudged to be very high, but according to the actual situation of the company and the current economic macro situation, it is not worth so much money. <>

4. Unable to maintain a balanced relationship between sales and inventory.

The management of the enterprise has a defective understanding of the nature of inventory, which makes the inventory of the enterprise accumulate to a certain extent. The lack of effective communication between the various functional departments of the enterprise makes the inventory of the enterprise unable to meet the needs of the market. The imperfection of the internal control system of the enterprise makes the supervision of inventory inefficient.

The lack of professional quality of management personnel makes it difficult for enterprises to determine the scientific inventory level. The technical means of inventory management are backward, resulting in the inventory information can not be transmitted to the relevant departments of the enterprise and its upstream and downstream enterprises in a timely manner.

Disadvantages of high inventory turnover:

Blindly increasing inventory turnover can lead to a surge in order lots, higher procurement costs, and other impacts.

Inventory levels are generally measured by inventory turnover. Inventory turnover is the ratio of sales revenue to inventory. The sales of enterprises are strong, the faster the turnover of goods, the greater the sales can be achieved with only less inventory, and the inventory turnover rate will be very high; On the contrary, if the company's sales are sluggish and the turnover of goods is slow, a large amount of inventory will be backlogged, and the inventory turnover rate will be very low.

Generally, the monthly inventory turnover rate is calculated as follows: monthly inventory turnover rate = logistics cost of sales in the current month and average inventory value.

Among them, the logistics cost of sales in the current month refers to the logistics cost included in the finished product sold.

Average inventory value – generally divided into three categories, i.e. raw materials, work-in-progress, and finished products, and in general, these three are taken into account when calculating.

If they are separated, the corresponding calculation formulas are: raw material inventory turnover rate, total cost of raw materials shipped out of the warehouse in the month, average inventory of raw materials; Inventory turnover rate in process Cost of finished materials produced in the month Average inventory in process; Inventory turnover of finished goods Monthly cost of materials sold Average inventory of finished goods in stock.

Direct Factors Affecting Inventory Turnover:

1. Inventory quantity: The liquidity of inventory will directly affect the current ratio of the enterprise. Therefore, special attention must be paid to the analysis of inventories. The analysis of inventory liquidity is generally carried out through the inventory turnover ratio.

2. Sales revenue: Under normal circumstances, if the enterprise operates smoothly and the higher the inventory turnover rate, the faster the inventory turnover of the enterprise and the stronger the sales ability of the enterprise. The less working capital is tied up in inventory, the less.

The calculation is as follows:

Number of Inventory Turns = Cost of Goods Sold Average Inventory Balance.

Inventory turnover days = 360 inventory turnover times.

The inventory turnover rate is related to the production and operation cycle of the enterprise. The short production and operation cycle means that there is no need to reserve a large amount of inventory, so its inventory turnover rate will be relatively accelerated. Therefore, when evaluating the inventory turnover rate, the production and operation characteristics of each industry should be considered.

What are the factors that affect the speed of inventory turnover rate?

Pro, the measures to improve the inventory turnover rate mainly start from two aspects: one is to optimize inventory management and strengthen inventory control; The second is to strengthen sales management and improve sales efficiency. The specific measures are as follows:

1.Establish and improve the inventory management system: including procurement planning, purchase, storage, distribution and other aspects of the regulations, clarify inventory management responsibilities and formulate corresponding assessment methods, strengthen inventory inventory and clean-up work.

2.Optimize procurement plan: adopt modern logistics management concept, establish an efficient ** chain, reduce procurement time and procurement costs, and avoid large-scale procurement.

3.Control the number of inventory and hunger: strengthen inventory management and control, reasonably set safety stocks and order cycles, control the number of purchases, and avoid the generation of scrap and unsalable products.

4.Improve the efficiency of warehouse management: rationally layout inventory, optimize warehouse management, improve inventory turnover rate and cargo handling capacity, and reduce storage costs.

5.Improve product quality: improve product quality, strengthen after-sales service, improve customer satisfaction, and promote better sales.

6.Optimize sales management: strengthen sales channel management, strengthen the professional quality of sales personnel, improve sales effectiveness, and promote product sales from the perspective of customer needs.

7.With the help of the Internet and big data technology: use the Internet and big data technology to develop new sales channels and new sales methods to improve sales efficiency.

8.Actively promote marketing strategies: strengthen marketing publicity, formulate targeted marketing strategies, increase product market share, and increase sales.

9.Carefully evaluate the sales of products: Analyze and evaluate product sales in a planned manner, find out the reasons for insufficient sales and take improvement measures to avoid inventory overstock.