How can we calculate the average inventory, Financial Management

Assignment Help:

Inventory days

(Average inventory/Cost of sales) x 365days

Average inventory can be arrived by taking this year's and last year's inventory values and dividing by 2 - (Opening inventories+ closing inventories) / 2

This ratio shows how long the inventory stays in the company before it is sold. The lower the ratio the more efficient the company is trading, but this may result in low levels of inventories to meet demand.

A lengthening inventory period may indicate a slowdown in trade and an excessive build-up of inventories, resulting in additional costs.

 


Related Discussions:- How can we calculate the average inventory

Risk return relationship, RISK RETURN RELATIONSHIP A business operates...

RISK RETURN RELATIONSHIP A business operates in a market environment, which is not within its control. It is exposed to several dangers from the internal with external sources

Explain the pricing-to-market phenomenon, Explain the pricing-to-market phe...

Explain the pricing-to-market phenomenon. Answer: The pricing-to-market abbreviated as PTM refers to the phenomenon that similar securities are priced in a different way for diff

Exchange requirements-, Exchange Requirements To ensure money supply, s...

Exchange Requirements To ensure money supply, some central banks require some or all of its foreign exchange receipts (generally from exports) be exchanged for the local curren

Describe about comfort letter, Q. Describe about Comfort Letter? Comfor...

Q. Describe about Comfort Letter? Comfort Letter - Letter provided by a company's independent public accountant to an underwriter when underwriter has a DUE DILIGENCE responsib

Taxation-hedge fund, Taxation In the US, every state has a different se...

Taxation In the US, every state has a different set of rules governing the taxation of Hedge Funds and the investors who put their money in them. In some countries, Hedge Funds

Active portfolio strategy, Active Portfolio Strategy: An active portfo...

Active Portfolio Strategy: An active portfolio strategy is tracked by most aggressive investors and investment professionals who strive to make superior returns, after adjustm

Explain why accounting profits and cash flows are different, Explain why ac...

Explain why accounting profits and cash flows are not the same thing. Ans: Stock value relies on future cash flows, their timing, and their riskiness.  Profit calculations do n

Asset-backed securities, Introduction When financial assets...

Introduction When financial assets or bonds are pooled together and offered to the investors for receiving the inflow of funds from these underlying

Linear programming, Linear programming, one of the ...

Linear programming, one of the important techniques of operations research, has been applied to a wide range of business problems. This techniqu

Callable bonds and puttable bonds, Convertible bonds can be classified into...

Convertible bonds can be classified into different types such as callable bonds and puttable bonds. These bonds are discussed as follows: Basics of Callable Bonds A callabl

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd