Commodity turnover is Basic concepts, analysis of indicators and ways to accelerate

2024 Author: Howard Calhoun | [email protected]. Last modified: 2024-01-02 13:48

World experience is evidence that the growth of wholesale trade today depends on the following trends in the economy: the growth of production in large-scale companies that are far from the leading producers of the finished product; expansion of production for the future, and not for the purpose of fulfilling previously concluded contracts; increase in the number of levels of intermediate users and producers; an increased need to tailor commercial products to the needs of both end-users and intermediate users in terms of product varieties, packaging and quantities.

Introduction

Before looking at inventory and turnover analysis, it is useful to discuss a fundamental aspect. Key transformations in the organization and further conduct of wholesale trade are primarily aimed at creating a competitive environment, giving the right to conduct wholesale trade to other individuals andlegal entities, as well as the restructuring of activities, taking into account world experience.

The idea of restructuring this type of trade speaks of the transformation of wholesale production and trade points into systems capable of providing independent regulation and forecasting events in the consumption market; creation of various parallel wholesale structures; removal of obstacles to the allocation of separate divisions or small forms of organization of this activity in wholesale enterprises voluntarily; non-interference in the activities of wholesalers; removal of restrictions related to turnover between regions; formation of wholesale and retail companies.

And now it is advisable to move on to inventory turnover. The main purpose of wholesale trading activities is the organization of a continuous and rational supply of marketable products to both large industrial enterprises and retailers. Balancing supply and demand also plays an important role. Let's consider this issue in more detail.

What is inventory turnover?

Reducing the profitability of sales of separate groups of goods in the case of simultaneous acceleration of their turnover, as a rule, leads to an increase in the profitability of the structure. The movement of stocks of marketable products, along with sales turnover, involves the installation of one of the most important economic indicators. This is the turnover.

Today turnover is understood as the time of circulation of goodsproducts from the day they are received until the day they are sold. In addition, we are talking about the speed of turnover of both raw materials and goods that need to be bought. Goods turnover is a description of the processes of re-renewal of stocks of marketable products in a supply and marketing type organization or at a trade enterprise.

Turnover and performance efficiency

It is worth noting that the turnover is one of the main indicators of the efficiency of the economic activity of a trade enterprise as a whole. It allows you to quantify and evaluate two parameters that are inherent in stocks of a commercial product. This is the time and speed of circulation. In other words, you need to calculate how much time it takes for a certain number of revolutions. Goods turnover can be expressed both by the number of days that are necessary to complete one turnover, and by the number of turnovers realized for a specific time period. The economic meaning of the presented indicators is similar, but there is a difference in the methods of determination.

It should be added that here we are talking about the turnover of money invested in stocks of marketable products. In addition, it should be understood that the time for which a certain number of revolutions is made shows how quickly the product will be sold and how soon the costs of its production and further circulation will be reimbursed.

Speed and acceleration of turnover

As mentioned above, in order toto characterize the speed of circulation of marketable products, it is also customary to use an indicator showing the number of revolutions for a certain period of time. Turnover in days to turnover in terms of a country's trade describes the duration of a marketable product in circulation, from the moment of production to the moment the product is sold to consumers.

As a result of the analysis of turnover, it turned out that if the turnover of funds invested in stocks of marketable products accelerates by one day, then an amount equal to the average sales volume per day is released from the trading area. Today, both trade and other sectors of the economy are faced with the task of organizing financial and economic activities in such a way as to prevent inventories of goods and materials in excess of the norm, as well as to ensure the acceleration of the turnover of all monetary and material resources.

Speed and time of circulation

As it turned out, the turnover is the time for which the product is sold in the amount of its average value for the reporting period. This means that indicators of the speed and time of circulation of marketable products are closely related. In this case, the dependence is inversely proportional. Reducing time and maximizing the speed of commodity circulation somehow increase the volume of turnover with smaller stocks of goods. Such an arrangement significantly affects the reduction of costs associated with the storage of a commercial product,reducing product losses and so on.

Commodity turnover is an economic indicator that it is advisable to study for trade in general. In other words, one should pay attention to the stocks of commercial products of the wholesale structure also in the retail network that it serves. To calculate this indicator in days for trade as a whole, it is necessary to divide the average stocks of marketable products that are in retail and wholesale trade by the actual turnover of marketable products of the retail network per day, including the turnover of the small-scale wholesale type of the wholesale structure.

Seasonal goods

When analyzing stocks and turnover, in addition to the stocks of a commercial product of the current storage, it is advisable to pay attention to the goods of preliminary delivery and seasonal storage. It is important to note that, at the same time, it is relevant to study the process of fulfilling tasks related to their accumulation in the appropriate assortment and volume, since the lack of these commodity stocks or their qualitative discrepancy in one way or another have a negative impact on wholesale sales as soon as the season begins.

Calculation of turnover

The time of circulation of marketable products or turnover in days is determined on the basis of information about the average stocks of a marketable product and turnover according to the following formula:

Rv_dn=(TK _avg D)/(T / Rv) or Rv_dn=TK av_/(T/Obone_),

• Where About_{days - turnover in days;}
• ТЗ_{avg – average stocks of marketable products for the required period (rub.);}
• T / About _{one - one-day turnover for the same period (rub.);}
• T / Vol - the volume of trade for the same period (rub.)
• D - the number of days in this period.

According to the formula of the average chronological moment series, inventory is calculated for the period being analyzed:

TK _av=(TK₁/2) + TK₂+TK ₃+….+(TK _/2)]/(n-1),

• Where ТЗ_{avg - the average stock of a marketable product for a specific period (rub.);}
• TK_1, TK_2, TK₃…. TK _{- the amount of stocks of goods on specific dates of the analyzed period (rubles);}
• n - the number of dates for which the inventory value is taken.

It should be added that the turnover in days of turnover reflects the time during which stocks of marketable products are in circulation. In other words, we are talking about the number of days during which the average stock of a marketable product turns over.

Calculation of the velocity of circulation of goods

The speed of circulation of marketable products, that is, the turnover in the number of revolutions, can be calculated by the formula:

V_r=(T / R) /TK_sr or Ob_r=D/V_day,

• Where About_{r - turnover in number of turns;}
• Days_{days - turnover in days of marketable products turnover;}
• ТЗ_{avg - average stock of marketable products for the same period (rub.);}
• D - the number of days in this period.

Explanations

As mentioned above, the turnover in the number of revolutions reflects the number of revolutions of the average stock of marketable products over a certain period of time. There is an extremely stable relationship between the speed and time of circulation of goods, which is inversely proportional. Increasing the speed and reducing the time of circulation of marketable products involves the implementation of a significant volume of trade with a smaller stock of goods. This contributes to the fact that product losses are reduced, and the costs of paying interest on loans and storing marketable products are reduced.

Ways to accelerate turnover

The turnover should be understood as one of the most important indicators of the efficiency of economic activity. Its acceleration characterizes the improvement of this type of activity, and vice versa. Accelerating the turnover of marketable products is the main task that any trade division faces in case of insufficient working capital. The longer the period of time a commodity product stays in the warehouse, the greater the cost of its maintenance becomes. One of the methods for effective management of assortments of goods is the correct combination of a commercial product with a high level of profitability for a given type of activity, but with a relatively low level of turnover, andalso goods with lower profitability, but high turnover.

What affects turnover?

In conclusion, it would be appropriate to consider the main factors that have a significant impact on the turnover. First, there are fluctuations in demand. If the supply of marketable products lags behind demand, the turnover for these goods accelerates. Secondly, it is the volume of retail trade turnover. Trade enterprises with a large volume of turnover are characterized by the presence of a sufficiently large number of stocks of marketable products and accelerated turnover. In addition, physical, chemical and consumer properties of marketable products can lengthen or limit the turnaround time.