Key Strategies to Enhance ITO – Inventory Turn Over

Clearance Sales, Mid-Night Sales and all other discounted sales at the malls and stores are always been the much awaited event of shoppers.

It could be for the reason that shoppers will be able to get commodities in a reasonable price or discounted prices. The rush to go to the malls is there, and even the air at the malls will seem festive every time there are sales being made.

Buying public are always being attractive to mall’s sales for Clearance Sales means that you can get signature clothing and bags on discounted prices.

If you are a savvy buyer, you could always be eyeing for commodities that has a certain percentage off or discount. Have you ever wonder why these stores and malls are resorting to giving discounted prices and clearance sales?

You must analyze these things, not on the perspective of a consumer, but it shall be on the perspective of company’s owners.

If you have your own a business or planning to have your own business, you must be very keen as to how you monitor your stocks.

In determining the period of which you can get hold of your commodities is what we call Inventory Turn Over. What does the term imply?

The term simply means the ratio on how many times the store’s inventory is being sold and replaced in a given period of time.

It has a certain formula of which is geared to calculate on how many days it will take to sell the commodity. The Inventory Turn Over can be an effective gauge to determine if there are poor sales as shown by low turnover or there are high sales or ineffective buying as reflected by a high inventory level.

Even with a high inventory level, you must still on guard for it might sign wherein the return for investment is of zero rate.

The formula for Inventory Turn Over is cost goods sold and which is being divided to the average inventory. This formula will determine on how many days will it take to sell the inventory at hand, and it is also being referred to as the turn over days. T

he ratio will be then comp0ared to the average inventory. In this way, business owner will be able to determine the response of the buying public if there is an unfavourable turn above will mean that it there is disappointing sales while a abrupt turn over can either mean that it has increase sales or ineffective buying.

As a business owner, you must be on guard on the following hints; low turn over is not a good sign for business for inventory will just deteriorate at the warehouse; it is also important to take note that those companies selling perishable goods has a high turn over rate, and for you to be assured that you have an exact number for Inventory Turn Over then you can make use of the average inventory which means that you will calculate the beginning average inventory and the ending inventory.

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