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

Determining the value at a node or backward induction, The value of node is...

The value of node is determined using a methodology called backward induction. The value at any node depends on the future cash flows; therefore, we need to start from

Plan for financial management, 1. Review and analyse financial data for the...

1. Review and analyse financial data for the last year to establish areas which have generated a profit or loss in your organisation. 2. Conduct a research to review reasons for

Explain the bird in the hand theory of cash dividends, Explain the bird in ...

Explain the bird in the hand theory of cash dividends. The bird in the hand dividends theory states that dividends received now are better as compared to a promise of future divi

Contrast a benefit and a defined contribution pension plan, Compare and con...

Compare and contrast a defined benefit and a defined contribution pension plan. In defined benefit plan retirement remuneration are determined by a formula that typically

Beta, Beta Beta is a measure of the market risk, or methodical risk, o...

Beta Beta is a measure of the market risk, or methodical risk, of a particular privacy or portfolio. Systematic risk defines any risk that influences the value of a huge numbe

Leverages, Evaluate the importance of leverages in financial management of ...

Evaluate the importance of leverages in financial management of small scale companies

Define why it is hard to maintain a fixed exchange rate, Once capital marke...

Once capital markets are integrated, it is hard for a country to maintain a fixed exchange rate. Explain why this may be so. Answer: one time capital markets are integrated int

Function of the investment decision, Q. Function of the Investment decision...

Q. Function of the Investment decision? Investment decision related of the selection of the fixed assets. the assets can be acquired fall into two board groups i) long terms

Objectives of working capital management, Q. Objectives of working capital ...

Q. Objectives of working capital management? The objectives of working capital management are habitually stated to be profitability and liquidity. These objectives are habitual

Show the current liabilities method, Q. Show the Current Liabilities Method...

Q. Show the Current Liabilities Method? Forecasting of Current Assets as well as Current Liabilities Method: - As-per to this method an estimate is made of forthcoming period's

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