Use this program to obtain an Inventory Turns Report. Inventory Turns are only calculated on stocked items. Any item that is flagged as non-stocked or uninventoried in the Item Master file is excluded from the calculation for turns.
The basic math is total cost of goods sold (or moved for purposes of serving customers) from stock divided by average inventory. The purpose of the turns measurement is to provide an indicator of how effectively a business is utilizing its investment in inventory to serve its customers.
When calculating the cost of goods for a specific location, transfers to other warehouses and sales of goods to customers are included in the calculation. This value is not the same as the usage number, since usage includes transactions, such as lost sales, which are not relevant to turns. Also, some reductions of inventory are not included in the cost of goods number because they cannot be tied directly to serving customers, e.g. inventory adjustments and returns to a vendor.
The calculated daily inventory value includes all of that day’s receipts. Today’s inventory value is yesterday’s ending inventory value plus all receipts of inventory on that day. That inventory value is then used to calculate the average inventory, which includes items that were received and shipped on the same day in the calculations.
Today’s ending inventory value is yesterday’s ending inventory plus today’s receipts minus today’s inventory reductions (some of which will be used for the turns calculations and some which will not).
After determining each day’s inventory value, the values are totaled and the divided by the number of days on which there was inventory activity. Not always dividing by 365 days produces a more accurate reflection of average investment in inventory.
For example: If an item has a cost of $1 and on January 1st 1 quantity of the item was purchased, and then sold on January 1 and never bought again, the daily inventory value is determined as follows:
When looking at daily inventory values, there is $1 on 1 day and $0 for all of the other 364 days of the year. If the average inventory value were calculated by adding them up and dividing by 365, the average inventory would be 1/365 = .002739; the total cost sold would be $1, so turns would be $1/.002739, producing 365 turns. This is clearly not an accurate reflection of the inventory investment.
Instead, the average inventory is calculated as the total divided by the number of days the inventory was carried. The average inventory would be $1 / 1 day = $1. With a cost of goods being $1, the turns = 1, giving an accurate reflection of how $1 investment in inventory was used.
In this example, it should be noted that this item is not really a stocked item, and probably should have been flagged as non-stocked, in which case it would not factor into turns at all.
Finally, the calculations for average inventory rely on accurate cost layers. Prior to running the turns report, you should be sure the Item Balancing Register has been run and updated.
The report includes this information.
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An asterisk (*) indicates that there is insufficient data to calculate turns and those items are not included in the totals.
A Rank range can be set at the company level, alone, or, it can also be set at a warehouse level. When the rank is set at the company level, the rank information is displayed in the header of the report (and indicates what the type is, either ‘Percentage’ or ‘Hit Count’) and the range that makes up each of the 5 possible entries (A – E). When the warehouse level is set, the warehouse level rank over-rides the company level rank with its own rank values and type of hit count. The Warehouse Rank value only prints on the report when a rank range is specified at the warehouse level.
To access this program, click Inventory Control>Reports & Prints >Inventory Turns Report.
Click field descriptions for information on each field.
See also
Editing the order, range and properties stored in templates
Setting printer properties in templates
Using print options in reports
Setting a default printer using templates topics
Viewing reports on screen (using the viewer)
Register formats and procedures