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Your stock levels are limit by capital, this will help you plan for spending on new and replacement stock. You can choose to focus resources on the areas of greatest value. However, low cost items can be crucial to your production process and should not be neglect. Importance of knowing the stock turnover rate This issue is more complicat than it appears at first glance. On the one hand, you sell your products that are in stock, but on the other hand, you replenish them to avoid out-of-stocks. How do you know how often you liquidate your stocks and why is this information important? This measure is call stock turnover.

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Calculating your inventory turnover ratio will help you do three important things for your business: Make more inform purchasing decisions . The products that collect dust in your warehouse do SMS Gateway Serbia not produce any benefit. To minimize spending a lot of time in storage, you should measure the average time products spend in your warehouse before being shipp to customers. Keep merchandise moving . This is especially important for distributors and trading companies that sell products that expire, such as food products. If you can’t calculate stock turnover, you’ll end up tying up cash on unsold products.

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Increase sales of star products . When inventory and sales management is done correctly, the best-selling products can be determin. And most importantly, you can do it DP Leads with unprecent inventory accuracy . Stock turnover can also be calculat to see your company’s performance in relation to the sector. How to calculate stock turnover Stock turnover ratio is one of the inventory KPIs that helps you compare the value of your total inventory to the sales of that inventory. The formula is simple: Stock Turnover = Average Annual Sales / Annual Stock Value By dividing gross sales by the cost of inventory over a one-year period, you’ll know how many times you’ve run out of inventory during that period.