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Answer Upon - Profitability And Stock Turn Rate
Almost everyone once in their life have thought about creating their own business, be their own boss, in other words, we all have dreamed about being an entrepreneur, but most of the people are afraid,they think that they are not going to achieve it and they finish being unsatisfied with a simple work.Working at Home is a wonderful experience, is a great way to have the same benefits such as your own business but with many less problems, everything is more simple, your life will be more flexible and with less stress. The people that work at home feel more free, you can manage your own time as you think is better for you, according to the life style that you want to have.Some of the many benefits of this new tendency are to be able to work in the comfort of your own home, work in your favorite place like in fr
WHAT IS THE IMPORTANCE OF STOCK TURN RATE?
The Stock Turn Rate ratio measures the effectiveness of inventory planning control. A Stock Turn Rate that is too low indicates poor planning and lack of control. A classification having a very low Stock Turn Rate usually will not be achieving its sales potential due to having too much old merchandise in stock and too little new, fresh merchandise. It is also likely to have higher than normal markdowns, thereby reducing Gross Profit. Stock Turn Rate can also be used to calc
eBay sellers are generating substantial revenues by selling DVDs. DVDs continue to be strong sellers due to the high demand for entertainment by consumers. Today’s consumers require a greater deal of entertainment than previous generations to counter the high stress lives they lead.To fully take advantage of the strong DVD market on eBay you should use the following tips.eBay DVD Sales Tip #1Creative movie descriptions. Instead of simply repeating the information found on the back of the DVD, you should write an original movie review. By inserting your own flair into the review you will have eBay shoppers taking a fresh look at the movie. Once you present them with a new angle, they will be more interested in the movie, and might even reconsider a movie which they previously lacked interest in.eBay DVD Sales Tip #2
To illustrate, a retailer may carry an average retail inventory of $200,000, with sales of $400,000, resulting in a 2.0 Stock Turn Rate. If this retailer had the same $400,000 sales but a 3.0 Stock Turn Rate, the average retail inventory would be $133,300. This is a difference of $66,700 at retail or approximately $32,000 at cost.
The cost of owning excess inventory is approximately 2?% per month, or 30% per year. This is due to increased expenses such as interest, insurance, buying expense, receiving department expense, property taxes, markdowns and shrinkage. Therefore, a retailer can reduce these expenses by reducing his average inventory level. In the example above, the annual savings would be approximately $10,000 ($32,000 times 30%).
All other things being equal, a higher stock turn rate tends to lead to higher sales and a higher profit, which should be an essential goal of every merchant. I will discuss this more later, but first we must have a good understanding of what Stock Turn Rate is and how it is to be computed.
WHAT IS STOCK TURN RATE?
Stock Turn Rate can be computed using units, cost dollars or retail dollars. For comparative purposes, it is desirable that the Stock Turn Rate calculation be standard. We advocate retail, which is the generally accepted method in the retail industry.
Stock Turn Rate is the ratio of sales to average inventory. It is computed as follows: Stock Turn Rate = Total Annual Sales divided by Average Inventory at Retail
Example A
Annual Sales = $900,000: Average Retail Inventory = $450,000:
Stock Turn Rate = 2.0
Example B
Annual Sales = $900,000: Average Retail Inventory = $300,000:
Stock Turn Rate = 3.0
COMPUTING AVERAGE INVENTORY
The chief problem in computing Stock Turn Rate is to determine the average stock carried during the period. This can be a problem since there are so many variations in use. The chief methods are:
1. Average of the inventory at the beginning and end of year.
2. Average of inventory at the beginning, middle and end of year.
3. Average of monthly inventory levels.
The standard is to use the average of the monthly inventory levels which is computed as follows:
Inventory at the beginning of the year plus the inventory at the end of each month, divided by thirteen.
WHAT STOCK TURN RATE IS NOT
While Stock Turn Rate is the ratio of sales to average stock, it is not the actual number of times a physical stock of goods is bought and sold during a period. A simplified example follows:
A retailer purchases a 4-month supply of socks, a staple item, and does not restock until the old stock is completely sold out. During the year, three purchases, each $4,0000 are made and three lots are sold, for a total of $12,000 but the Stock Turn Rate is not three. The average stock is about a 2-month supply, since four month's supply is on hand only at the start of each 4-month period and virtually none is on hand at the end of each 4-month period. THus the average stock is about half the amount received each 4-month period, or $2,000. This results in a Stock Turn Rate of approximately six, and a lot of lost sales due to having such a low supply on hand during much of the year.
WHAT IS THE IMPORTANCE OF STOCK TURN RATE?
The Stock Turn Rate ratio measures the effectiveness of inventory planning control. A Stock Turn Rate that is too low indicates poor planning and lack of control. A classification having a very low Stock Turn Rate usually will not be achieving its sales potential due to having too much old merchandise in stock and too little new, fresh merchandise. It is also likely to have higher than normal markdowns, thereby reducing Gross Profit. Stock Turn Rate can also be used to calcu
eBay (UK) now sells more cars than Autotrader. If your not based in the UK, Autotrader is a dedicated weekly magazine which contains thousands of classified vehicle adverts each with a colour photo & detailed description.Despite the massive success eBay have achieved with vehicle sales it's a fact to say a large percentage go unsold, as they do not attract enough attention, do not reach there reserve price or the sale falls though for an unknown reason.So, if your considering selling a car though eBay what can increase your chances of a successful sale. As a car is a massive purchase for most users it's absolutely essential to include two elements to your item description.Lets start with the description. Your item description should everything about the car including any known faults, scratches or marks. Is there anything in the
All other things being equal, a higher stock turn rate tends to lead to higher sales and a higher profit, which should be an essential goal of every merchant. I will discuss this more later, but first we must have a good understanding of what Stock Turn Rate is and how it is to be computed.
WHAT IS STOCK TURN RATE?
Stock Turn Rate can be computed using units, cost dollars or retail dollars. For comparative purposes, it is desirable that the Stock Turn Rate calculation be standard. We advocate retail, which is the generally accepted method in the retail industry.
Stock Turn Rate is the ratio of sales to average inventory. It is computed as follows: Stock Turn Rate = Total Annual Sales divided by Average Inventory at Retail
Example A
Annual Sales = $900,000: Average Retail Inventory = $450,000:
Stock Turn Rate = 2.0
Example B
Annual Sales = $900,000: Average Retail Inventory = $300,000:
Stock Turn Rate = 3.0
COMPUTING AVERAGE INVENTORY
The chief problem in computing Stock Turn Rate is to determine the average stock carried during the period. This can be a problem since there are so many variations in use. The chief methods are:
1. Average of the inventory at the beginning and end of year.
2. Average of inventory at the beginning, middle and end of year.
3. Average of monthly inventory levels.
The standard is to use the average of the monthly inventory levels which is computed as follows:
Inventory at the beginning of the year plus the inventory at the end of each month, divided by thirteen.
WHAT STOCK TURN RATE IS NOT
While Stock Turn Rate is the ratio of sales to average stock, it is not the actual number of times a physical stock of goods is bought and sold during a period. A simplified example follows:
A retailer purchases a 4-month supply of socks, a staple item, and does not restock until the old stock is completely sold out. During the year, three purchases, each $4,0000 are made and three lots are sold, for a total of $12,000 but the Stock Turn Rate is not three. The average stock is about a 2-month supply, since four month's supply is on hand only at the start of each 4-month period and virtually none is on hand at the end of each 4-month period. THus the average stock is about half the amount received each 4-month period, or $2,000. This results in a Stock Turn Rate of approximately six, and a lot of lost sales due to having such a low supply on hand during much of the year.
WHAT IS THE IMPORTANCE OF STOCK TURN RATE?
The Stock Turn Rate ratio measures the effectiveness of inventory planning control. A Stock Turn Rate that is too low indicates poor planning and lack of control. A classification having a very low Stock Turn Rate usually will not be achieving its sales potential due to having too much old merchandise in stock and too little new, fresh merchandise. It is also likely to have higher than normal markdowns, thereby reducing Gross Profit. Stock Turn Rate can also be used to calc
You hear so much talk about RSS these days on the Internet and in the media. Everyone is acknowledging it's importance in boosting your site's presence on the web. Not to mention how it can increase your site's traffic and ranking. But what exactly is RSS and how can I actually use it on my site? Try these Five Easy Ways...First, just what is RSS?RSS stands for 'Really Simple Syndication'. Basically, RSS allows you to directly deliver your content to all interested parties... don't come to us; we will deliver the information to you or your website.It syndicates your content. It lets you send updated headlines and brief summaries to your subscribers. In a nutshell; it's simply a more efficient way to get your content 'out there'.Many people associate RSS with Blogs or Blogging because Blogs are usually writt
Example A
Annual Sales = $900,000: Average Retail Inventory = $450,000:
Stock Turn Rate = 2.0
Example B
Annual Sales = $900,000: Average Retail Inventory = $300,000:
Stock Turn Rate = 3.0
COMPUTING AVERAGE INVENTORY
The chief problem in computing Stock Turn Rate is to determine the average stock carried during the period. This can be a problem since there are so many variations in use. The chief methods are:
1. Average of the inventory at the beginning and end of year.
2. Average of inventory at the beginning, middle and end of year.
3. Average of monthly inventory levels.
The standard is to use the average of the monthly inventory levels which is computed as follows:
Inventory at the beginning of the year plus the inventory at the end of each month, divided by thirteen.
WHAT STOCK TURN RATE IS NOT
While Stock Turn Rate is the ratio of sales to average stock, it is not the actual number of times a physical stock of goods is bought and sold during a period. A simplified example follows:
A retailer purchases a 4-month supply of socks, a staple item, and does not restock until the old stock is completely sold out. During the year, three purchases, each $4,0000 are made and three lots are sold, for a total of $12,000 but the Stock Turn Rate is not three. The average stock is about a 2-month supply, since four month's supply is on hand only at the start of each 4-month period and virtually none is on hand at the end of each 4-month period. THus the average stock is about half the amount received each 4-month period, or $2,000. This results in a Stock Turn Rate of approximately six, and a lot of lost sales due to having such a low supply on hand during much of the year.
WHAT IS THE IMPORTANCE OF STOCK TURN RATE?
The Stock Turn Rate ratio measures the effectiveness of inventory planning control. A Stock Turn Rate that is too low indicates poor planning and lack of control. A classification having a very low Stock Turn Rate usually will not be achieving its sales potential due to having too much old merchandise in stock and too little new, fresh merchandise. It is also likely to have higher than normal markdowns, thereby reducing Gross Profit. Stock Turn Rate can also be used to calc
Print advertising is essential. It engenders sales. If the public has had no previous exposure to your name or company, chances are that they will probably not choose to do business with you. You must invest in print advertising to build salesmanship. Let people see who you are. In time, they will remember you.Repetition is key in creating awareness in the public eye. You can’t publish one ad in one newspaper at random time periods and expect to foster revenue. People need to see your advertising- frequently. And, it takes time. Just because you have spent time and money on advertising, doesn’t mean that people are necessarily noticing your efforts. The public needs time to see your ads and respond to a variety of methods. What forms of advertising are you adopting? The Internet, e-blasts, e-mails, a web site, billboards, signage, po
Inventory at the beginning of the year plus the inventory at the end of each month, divided by thirteen.
WHAT STOCK TURN RATE IS NOT
While Stock Turn Rate is the ratio of sales to average stock, it is not the actual number of times a physical stock of goods is bought and sold during a period. A simplified example follows:
A retailer purchases a 4-month supply of socks, a staple item, and does not restock until the old stock is completely sold out. During the year, three purchases, each $4,0000 are made and three lots are sold, for a total of $12,000 but the Stock Turn Rate is not three. The average stock is about a 2-month supply, since four month's supply is on hand only at the start of each 4-month period and virtually none is on hand at the end of each 4-month period. THus the average stock is about half the amount received each 4-month period, or $2,000. This results in a Stock Turn Rate of approximately six, and a lot of lost sales due to having such a low supply on hand during much of the year.
WHAT IS THE IMPORTANCE OF STOCK TURN RATE?
The Stock Turn Rate ratio measures the effectiveness of inventory planning control. A Stock Turn Rate that is too low indicates poor planning and lack of control. A classification having a very low Stock Turn Rate usually will not be achieving its sales potential due to having too much old merchandise in stock and too little new, fresh merchandise. It is also likely to have higher than normal markdowns, thereby reducing Gross Profit. Stock Turn Rate can also be used to calc
The logistics industry offers many lucrative business opportunities to the canny entrepreneur. Since instruments and machinery for transportation, sorting, building etc. are in demand in almost all industrialized nations, your logistics equipment business will flourish provided you follow certain guidelines. This article discusses how to start a logistics equipment company and how to make it flourish.Logistics Business: Making a Start.1) Decide The Kind Of Equipment You Will Deal In: The logistics equipments are as varied as the industries it caters to. You can go for transportation equipment like forklifts, carts, cranes, trucks etc. Alternatively, you can deal in machinery used in factories, like racking, sorters, packaging equipment etc.2) Pick The Area You Wish To Be: Do you prefer manufacturing logistics equipment, selling t
WHAT IS THE IMPORTANCE OF STOCK TURN RATE?
The Stock Turn Rate ratio measures the effectiveness of inventory planning control. A Stock Turn Rate that is too low indicates poor planning and lack of control. A classification having a very low Stock Turn Rate usually will not be achieving its sales potential due to having too much old merchandise in stock and too little new, fresh merchandise. It is also likely to have higher than normal markdowns, thereby reducing Gross Profit. Stock Turn Rate can also be used to calculate the proper beginning-of-month inventory level for each classification on the Open-To-Buy.
ADVANTAGES OF A FAST STOCK TURN RATE
In retailing it is important to realize a large volume of sales on as small an inventory investment as possible while maintaining sufficient inventory to meet customer demands. Also, it is important, as fashions and seasons change, to turn the inventory quickly so as to avoid excessive markdowns or carryover of out-of-season inventory. Another advantage is that a fast Stock Turn Rate will actually increase sales due to the increased flow of fresh new merchandise.
LIMITATIONS OF A FAST STOCK TURN RATE
While a fast Stock Turn Rate has many advantages, the Stock Turn Rate can be too fast for a particular classification. When that happens the store risks losing sales due to inadequate assortments.
WHAT CAN BE DONE TO IMPROVE STOCK TURN RATE?
From a study of the basic Stock Turn Rate formula, it is clear that there are three ways to increase Stock Turn Rate:
1. Increase sales without increasing the average stock assortment.
2. Decrease stocks without interfering with sales.
3. Increase sales and at the same time reduce stocks.
The approach used depends on the circumstances. Probably the surest way to increase Stock Turn Rate over a period of time, is to increase sales volume without a proportionate increase in inventory levels. However, since a retailer has greater control over his inventory than over his sales, this should be where attention should be given first. THe first step to increasing Stock Turn Rate and sales, incidentally, is the preparation of an Open-To-Buy. This should be based upon planned sales, planned markdowns and planned Stock Turn Rate. Once the Open-To-Buy has been prepared, the retailer can turn his attention to taking the necessary steps to reduce the actual inventory on hand to bring it in line with the planned inventory on the Open-To-Buy. A few suggestions on how to do this follow:
1. Buy more frequently, in smaller quantities.
2. Reduce number of assortments (vendors, styles, colors, sizes, prices).
3. Eliminate slow-selling merchandise.
4. Buy closer to the selling season.
SUMMARY
Stock Turn Rate is an important ratio used to measure the effectiveness of merchandise planning and control. Its two most important uses are in Open-To-Buy planning and then in measuring performance against this plan. Most retailers I see that are having problems achieving adequate profits have a poor Stock Turn Rate due to lack of planning, which results in overbuying, excessive markdowns and a low Gross Margin.
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