Formulas to know average inventory
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Formulas to Know: Average Inventory. Month 1 + Month 2 + Month 3 Number of months. No audio on this slide. Inventory valued at $1,000,000. Product. Product. Product. Product. Product. Product. Product. Product. Sales = $1,000,000. Product. Product.

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Formulas to Know: Average Inventory

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Formulas to know average inventory

Formulas to Know: Average Inventory

Month 1 + Month 2 + Month 3

Number of months

No audio on this slide.


Formulas to know average inventory

Inventory valued at

$1,000,000

Product

Product

Product

Product

Product


Formulas to know average inventory

Product

Product

Product

Sales = $1,000,000

Product

Product

We sell a million dollars worth

of product out the door…


Formulas to know average inventory

And replace it

with…

Product

Product

Product

Product

Product

Sales = $1 MM


Formulas to know average inventory

And replace it

with…

Product

Product

Product

Product

New inventory

valued at

$1,000,000

Product

Product

Product

Product

Product

Product

Sales = $1 MM


Formulas to know average inventory

Product

Product

Product

Product

Inventory

valued at

$1,000,000

Product

Product

Product

Product

Product

Product

Sales = $1 MM

We have turned over our inventory

one time.


Formulas to know average inventory

Net sales_______ = $1,000,000

Average inventory at retail = $1,000,000

= 1

Product

Product

Product

Product

Inventory

valued at

$1,000,000

Product

Product

Product

Product

Product

Product

Sales = $1 MM

We have turned over our inventory

one time.


Formulas to know average inventory

Net sales_______ = $1,000,000

Average inventory at retail = $1,000,000

Product

Product

Product

Product

Average

inventory

valued at

$1,000,000

Product

Product

Product

Product

Product

Product

Sales = $1 MM

However, it is average inventory.


Formulas to know average inventory

Net sales_______ = $1,000,000

Averageinventory at retail = $1,000,000

Product

Product

Product

Product

Product

Product

Product

Average

inventory

valued at

$1,000,000

Product

Product

Product

Product

Product

Product

Product

Product

Sales = $2 MM


Formulas to know average inventory

Net sales_______ = $2,000,000

Averageinventory at retail = $1,000,000

= 2 inventory

turns

Product

Product

Product

Product

Product

Product

Product

Average

inventory

valued at

$1,000,000

Product

Product

Product

Product

Product

Product

Product

Product

Sales = $2 MM


Formulas to know average inventory

Net sales_______ = $2,000,000

Averageinventory at retail = $ 500,000

Product

Product

Product

Product

Product

Product

Product

Average

inventory

valued at

$500,000

Product

Product

Product

Product

Product

Sales = $2 MM


Formulas to know average inventory

Net sales_______ = $2,000,000

Averageinventory at retail = $ 500,000

Product

Product

Product

Product

Product

Product

Product

Average

inventory

valued at

$500,000

Product

Product

Product

Product

Product

Sales = $2 MM


Formulas to know average inventory

Net sales_______ = $2,000,000

Average inventory at retail = $ 500,000

= 4 inventory

turns

Product

Product

Product

Product

Product

Product

Product

Average

inventory

valued at

$500,000

Product

Product

Product

Product

Product

Sales = $2 MM


Formulas to know average inventory

Net sales_______ = $2,000,000

Averageinventory at retail = $ 500,000

= 4 inventory

turns

Product

Product

Product

Product

Product

Product

Product

Average

inventory

valued at

$500,000

Product

Product

Product

Product

Product

Sales = $2 MM

We have kept sales levels up, using less

average inventory.


Formulas to know average inventory

PPT 12-6

Gross Margin %, Inventory Turnover, & GMROI for Selected Department in Discount Stores


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