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Formulas to Know: Average Inventory

Formulas to Know: Average Inventory. Month 1 + Month 2 + Month 3 Number of months. No audio on this slide. Inventory valued at $1,000,000. Product. Product. Product. Product. Product. Product. Product. Product. Sales = $1,000,000. Product. Product.

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Formulas to Know: Average Inventory

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  1. Formulas to Know: Average Inventory Month 1 + Month 2 + Month 3 Number of months No audio on this slide.

  2. Inventory valued at $1,000,000 Product Product Product Product Product

  3. Product Product Product Sales = $1,000,000 Product Product We sell a million dollars worth of product out the door…

  4. And replace it with… Product Product Product Product Product Sales = $1 MM

  5. And replace it with… Product Product Product Product New inventory valued at $1,000,000 Product Product Product Product Product Product Sales = $1 MM

  6. Product Product Product Product Inventory valued at $1,000,000 Product Product Product Product Product Product Sales = $1 MM We have turned over our inventory one time.

  7. Net sales_______ = $1,000,000 Average inventory at retail = $1,000,000 = 1 Product Product Product Product Inventory valued at $1,000,000 Product Product Product Product Product Product Sales = $1 MM We have turned over our inventory one time.

  8. Net sales_______ = $1,000,000 Average inventory at retail = $1,000,000 Product Product Product Product Average inventory valued at $1,000,000 Product Product Product Product Product Product Sales = $1 MM However, it is average inventory.

  9. Net sales_______ = $1,000,000 Averageinventory at retail = $1,000,000 Product Product Product Product Product Product Product Average inventory valued at $1,000,000 Product Product Product Product Product Product Product Product Sales = $2 MM

  10. Net sales_______ = $2,000,000 Averageinventory at retail = $1,000,000 = 2 inventory turns Product Product Product Product Product Product Product Average inventory valued at $1,000,000 Product Product Product Product Product Product Product Product Sales = $2 MM

  11. Net sales_______ = $2,000,000 Averageinventory at retail = $ 500,000 Product Product Product Product Product Product Product Average inventory valued at $500,000 Product Product Product Product Product Sales = $2 MM

  12. Net sales_______ = $2,000,000 Averageinventory at retail = $ 500,000 Product Product Product Product Product Product Product Average inventory valued at $500,000 Product Product Product Product Product Sales = $2 MM

  13. Net sales_______ = $2,000,000 Average inventory at retail = $ 500,000 = 4 inventory turns Product Product Product Product Product Product Product Average inventory valued at $500,000 Product Product Product Product Product Sales = $2 MM

  14. Net sales_______ = $2,000,000 Averageinventory at retail = $ 500,000 = 4 inventory turns Product Product Product Product Product Product Product Average inventory valued at $500,000 Product Product Product Product Product Sales = $2 MM We have kept sales levels up, using less average inventory.

  15. PPT 12-6 Gross Margin %, Inventory Turnover, & GMROI for Selected Department in Discount Stores

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