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How to calculate inventory turnover? Firstly, you must know the inventory turnover formulas. Here is the example.
The result of inventory turnover analysis is depended on the nature of the business. If the inventory turnover increased, it is not possible to analyse that is satisfactory or unsatisfactory, because the nature of the business is unknown.
There’re two alternatives about the inventory turnover formula, one shows the result as times p.a., another shows the result as days.
Net realisable value (NRV) is the revenue (sales proceeds) expected to be earned in the future when the goods are sold, less any selling costs incurred.
The inventory position is the person who manage and record the quantity, type, value of material or supplies about the inventory.
What is inventory management? It’s a complex question. It refers to these aspects: the count of cost, the opening inventory and the closing inventory.
The cost of goods sold inventory is matching with the inventory in the current accounting period. The cost of goods sold inventory = Opening inventory + Purchases – Closing inventory.
Some friends may ask what is the depreciation inventory, or the relationship between the depreciation and the inventory. Actually, it’s a simple easy question.
Closing inventory appears on the balance sheet as an asset. In some countries inventory is referred to as ‘stock’.
The balance carried down (c/d) is a balance at the end of the accounting period which will be entered on the balance sheet representing closing balance. It’s also brought down (b/d) at the beginning of the following accounting period, representing the opening balance for the next accounting period.
