Saidas

Inventory derangement balance or Stock Turn over proportionality (ITR): Every firm has to maintain a genuine level of size up of finished goods so as to be able to meet the requirements of the business. But the level of armory should incomplete be to a fault high nor too low. A too high inventory means high carrying approachs and higher risk of stocks becoming obsolete whereas too low inventory may mean the loss of business opportunities. It is very immanent to keep sufficient stock in business. 1 commentary: Stock puzzle out over symmetry and inventory turn over ratio be the same. This ratio is a blood between the cost of goods sell during a exceptional extremity of time and the cost of average inventory during a particular period. It is expressed in hail of times. Stock turn over ratio/Inventory turn over ratio indicates the number of time the stock has been turned over during the period and evaluates the capacity with which a firm is able to manage its inventory. This ratio indicates whether investing in stock is within proper limit or not. 2 Components of the Ratio: Average inventory and cost of goods sold are the two elements of this ratio. Average inventory is calculated by adding the stock in the beginning and at the and of the period and dividing it by two.

In case of monthly balances of stock, all the monthly balances are added and the total is divided by the number of months for which the average is calculated. 3 Formula of Stock Turnover/Inventory Turnover Ratio: The ratio is calculated by dividing the cost of goods sold by the amount of average stock at cost.   | |(a) [Inventory Turnover Ratio = Cost of goods sold / Average inventory at cost] | Generally, the cost of goods sold may not be known from the produce financial statements. In such circumstances, the inventory turnover ratio may be calculated by dividing net sales by average inventory at cost. If average inventory at cost is not known then inventory... If you extremity to get a full essay, order it on our website: Ordercustompaper.com

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