Five Important Inventory Metrics To Keep Track Of Inventory Performance

1. Five Important Inventory Metrics To Keep Track Of Inventory Performance Inventory metrics are a quick and accurate tool for busy manufacturers and distributors to evaluate the success of the company. Even if there are more comprehensive indicators like the current ratio and the debt-to-equity ratio, keeping track of inventory performance has unique value. It's important to have a financial perspective because inventory stock is frequently one of the greatest assets on a company's balance sheet. With all the bulk buying and selling of Tablets Over Stock , Mobile ageing stock and Home Appliances ageing stock it's become important to have a good understanding of inventory. stock, Electronics ageing The following are five inventory metrics to pay attention to. Cost of Goods Sold:

2. The term "cost of goods sold" (COGS) refers to the entire variable cost of the inventory stock that is actually sold to customers. Businesses with a lot of inventory are obviously aware of the importance of COGS from a tax viewpoint, but it's also a useful measure to consider when comparing product lines and figuring out how to profitably price your products. Gross profit: Efficiency improvement is likely to be a top priority in any business with a growth-oriented strategy. Examining business procedures carefully to find waste and delays is one method of measuring efficiency. This is a crucial exercise from time to time. But it's difficult to beat gross margin for a rapid indication on how effectively the company is running. The gross margin is determined by dividing the entire sales income of your company by the cost of items sold. Availability of Stock: Knowing how much inventory your company has on hand at any given time is half the battle in inventory management. A quick glimpse can tell you whether to place an order or hold fire if you are aware of the recommended inventory stock level for your company. Turnover of Inventory: Dividing the cost of items sold by "average inventory" is a typical way to calculate inventory turnover. The inventory turnover ratio simply indicates how frequently a company cycles through completely fresh inventory over the course of a specific time period. It's a helpful diagnostic tool; if your inventory rotates too slowly, your company might be carrying excess product, whereas a very rapid turnover might indicate your company is holding insufficient supply to reliably meet demand. In a lean operation vs one that maintains safety Monitors Ageing Stock and Desktops ageing stock, this measure will probably seem differently. Daily Supply: This is an additional helpful metric to determine if you have the appropriate amount of goods on hand. Inventory on hand divided by average daily usage yields the days of supply. Days of supply will typically be low if you're using a

3. lean strategy to inventory. If not, think about if your days of supply are protecting your company from the danger of a disruption in the supply chain.