How and why to determine product turnover

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Anyone whose activity is somehow related to trade should know what the turnover of goods is and how to determine it. This will help to successfully run a business and control the financial position of the enterprise.

Product turnover

What is inventory turnover?
Turnover is an indicator that allows you to find out how quickly the money paid for the goods will return with profit. Why determine it? There are several good reasons for this:

Turnover allows you to determine the length of the product sales cycle and compare it with similar offers.
It is capable of adjusting individual product inventory standards.
Calculating this indicator allows you to notice problems in time and eliminate them.
In this way, you can check the performance of both individual company employees and the entire department.
Knowing the level of product turnover allows you to optimize logistics.
This indicator makes it possible to determine thedubai email list illiquidity of specific product positions and stop their sale.
How to calculate inventory turnover
The calculation of the turnover of goods can be done using generally accepted formulas. For example, in order to find out how many days it will take to sell the average stock of goods, you need to multiply the average stock by the number of days of the calculation period and divide by the turnover (the total cost of the products sold over a certain period of time). Thus, in this case, the turnover is calculated in days.

If you need to determine how many times a product has been sold (“turned over”) in a certain period of time, you should divide the turnover for a specific period by the average stock of the product for the same period of time.

There is such a concept as "turnover rate". It displays the number of turnovers or days in which the goods must be sold. At the same time, it differs depending on the type of goods, the company's strategy, the sales region and other factors. But this indicator helps to focus on a stable result, plan the activities of the enterprise and think through the strategy.

How to calculate inventory turnover

How to improve inventory turnover
In order to improve turnover indicators, it is necessary to take measures, namely:

Identify illiquid goods. This may be products that are sold, but their stocks significantly exceed demand. It is necessary to remove them from the assortment and do everything to ensure that similar situations do not recur in the future.
Adjust the cost of products. Price has a significant impact on demand. It must be competitive and attractive to customers. Therefore, it is necessary to constantly monitor the cost of specific products on the market.
Activate sales. There are many ways to sell goods that have been lying around in the warehouse for a while, but cannot be returned to the supplier. For example, this could be a sale, discounts, or selling them together with popular products (as a gift).