Inventory turnover

This article describes the inventory metric. For the sales speed of a product in retail, see Goods rotation .

The inventory turnover rate is a business key figure that indicates how often an average inventory has been completely removed from a warehouse and replaced during a fiscal year . It can be calculated for the entire warehouse management of a company or for parts of the warehouse. The calculation for individual products is also possible; in this case the index is called the reciprocal value of goods rotation . A synonym for inventory turnover is "turnover coefficient".

General

In particular , stock-intensive companies , where the stockpiling plays an important role, is the inventory turnover of great importance. The intensive stockpiling concerns both raw materials , auxiliary materials , operating materials and semi-finished products that are further processed in the company , as well as finished products that are resold.

For trading companies in particular , the inventory turnover rate is an important key figure for determining the contribution made by trading goods to the company's success . Due to the possibility of differentiating the stock turnover rates according to assortment (articles, article groups or types of goods) and companies (e.g. branches ), these key figures are useful indicators for the strengths and weaknesses of the retail company in terms of strategic management . The warehouse turnover rate related to the entire company is also suitable as an inter-company key figure for comparing companies .

The storage of current assets is subject to a high level of capital commitment , because the stored assets have to be financed by internal and / or external financing and therefore cause capital costs. Other types of costs can also make it necessary to improve the inventory turnover rate in order to be able to compensate for disadvantageous costs. This means that the stock turnover rate is also a productivity indicator with which the productivity of the production factor capital , which is tied up in stocks, can be measured.

calculation

The inventory turnover always depends on the period under consideration and therefore relates to a specific billing period . The starting point is the average stock level , which is usually determined in a simplified manner (assuming a constant stock exit speed ) using the arithmetic mean of the initial and final stock levels:

${\displaystyle {\varnothing \mathrm {Lagerbestand} }={\frac {\mathrm {Lageranfangsbestand} +\mathrm {Lagerendbestand} }{2}}}$

Since the numerator is the stock and the denominator is the average amount, it is a dimensionless number . A more accurate way to calculate the average inventory level is to add twelve end-of-month inventory to the opening inventory and then divide by thirteen. If the 12-month period is used on a rolling basis, seasonal fluctuations in the inventory are compensated for:

${\displaystyle {\varnothing \mathrm {Lagerbestand} }={\frac {\mathrm {Anfangsbestand} +\mathrm {Monatsende_{1}} +\mathrm {Monatsende_{2}} +\dotsb +\mathrm {Monatsende_{12}} }{13}}}$

In a further step, the inventory turnover rate can now be determined:

${\displaystyle \mathrm {Lagerumschlagsh{\ddot {a}}ufigkeit} ={\frac {\mathrm {Wareneinsatz} }{\varnothing {\text{Lagerbestand zu Einstandspreisen}}}}}$

or

${\displaystyle \mathrm {Lagerumschlagsh{\ddot {a}}ufigkeit} ={\frac {\mathrm {Lagerabg{\ddot {a}}nge} }{\varnothing \mathrm {Lagerbestand} }}}$

or

${\displaystyle \mathrm {Lagerumschlagsh{\ddot {a}}ufigkeit} ={\frac {\mathrm {Jahresumsatz} }{\varnothing \mathrm {Lagerbestand} }}}$

The reciprocal of the warehouse turnover rate is the warehouse range, i.e. the length of time the goods remain in the warehouse.

Business aspects

The inventory turnover rate is particularly important in industrial and trading companies with an intensive inventory management. The higher the inventory turnover, the lower the capital commitment and vice versa. The bonded warehouse in the capital is not the company for other purposes ( investments , debt service ) and can by increased inventory turnover released are. The inventory turnover rate therefore also affects the liquidity of a company. A high inventory turnover rate also improves profitability and therefore profit . Namely, the higher certain types of cost are, the higher the inventory turnover rate must be. An increased inventory turnover rate can help reduce storage costs . Chain stores with their high space costs ( rental prices in the best business location ) are dependent on a high inventory turnover rate in order to compensate for the disadvantageous cost effect. Finally, a high inventory turnover also shortens the storage duration / storage range (the length of time goods remain in the warehouse), which in turn reduces the storage risks of spoilage , damage , shrinkage , fashionable or technical obsolescence .

For trading companies, the inventory turnover rate is also a benchmark for the calculation . The higher the inventory turnover, the lower the trading margin can be calculated in order to achieve a constant gross profit for individual items, parts of the range or the entire range.

The inventory turnover rate can be improved by switching to just-in-time delivery , shortening order cycles for suppliers , introducing mail-order business or a consistent product range policy through " fast- moving" lists with prioritization of " fast movers " and delisting of " slow movers " . This means that the inventory turnover rate can also lead to a streamlining of the range. While discounters can achieve an annual inventory turnover rate of 40, it is around 3 in furniture retailing and below 1 for jewelers. Accordingly, with a key figure of 40, discounters turn over their range of goods 40 times a year, i.e. more than three times a month.

A sustainable improvement in this key figure can also have an impact on the rating of companies.

Individual evidence

1. ^ Gabler Lexicon Logistics Management of logistic networks and rivers . Gabler Verlag, Wiesbaden 1998, ISBN 978-3-322-96526-4 , p. 252 .
2. ^ Klaus Deimel; Kai Wiltinger: Controlling . 1st edition. Vahlen, Franz, Munich 2010, ISBN 978-3-8006-3716-4 , pp. 184 .
3. ↑ Kotzab, Herbert: Compact logistics knowledge . De Gruyter, Berlin, ISBN 978-3-11-047328-5 , pp. 178 .
4. ↑ Hans-Otto Schenk, Marktwirtschaftslehre des Handels , Wiesbaden 1991, pp. 263-280, ISBN 3-409-13379-8
5. ↑ Willy Schneider / Alexander Hennig, Lexicon Key Figures for Marketing and Sales , 2008, p. 208
6. ↑ Willy Schneider / Alexander Hennig, Lexicon Key Figures for Marketing and Sales , 2008, p. 209
7. ↑ “Fast movers” are merchandise with a high, “slow movers” with low inventory turnover
8. ↑ Willy Schneider / Alexander Hennig, Lexicon Key Figures for Marketing and Sales , 2008, p. 210
9. ↑ Wolfgang Lück (Ed.), Lexikon der Betriebswirtschaft , 1983, p. 709
10. ↑ Willy Schneider / Alexander Hennig, Lexicon Key Figures for Marketing and Sales , 2008, p. 210