The formula for calculating the turnover and examples

One of the indicators that characterizes the dynamics of sales of the company is the turnover. It is calculated at selling prices. The analysis of turnover gives an assessment of the qualitative and quantitative indicators of work in the current period. The validity of future calculations depends on the conclusions made. Let us consider in more detail the methods of calculating the turnover.

Inventory turnover

Everything that is in stock is a working asset of the organization. This is frozen cash. To understand how much time it takes to re-convert goods into cash, an analysis of inventory turnover is carried out.

The presence of stocks on the one hand is an advantage. But even when they accumulate, sales decline, the organization still has to pay inventory taxes. In such cases, they speak of low turnover. At the same time, the high speed of selling goods is not always a big advantage. With an increase in turnover, there is a risk that the client will not find the right product and will turn to another seller. To find a middle ground, you need to be able to analyze and plan inventory turnover.

Terms

A product is what is bought and sold. This category also includes services if their cost is paid by the buyer (packaging, delivery, payment for communication services, etc.).

Inventory is a list of goods available for sale. For organizations engaged in retail and wholesale trade, the stocks are goods lying on the shelves, and those that are in stock, delivered and stored.

The term “inventory” also includes products that are still in transit, in stock, or are in receivables. In the latter case, the seller retains title until the goods have been paid. Theoretically, he can ship it to his warehouse. When calculating the turnover, only products that are in stock are taken into account.

Turnover is the sales volume in monetary terms calculated for a certain period. Next will be described the algorithm by which the turnover is calculated, the calculation formula.

Example 1

It is necessary to calculate the average inventory for six months, based on the data in the table.

Average stock:

Tk avg = 278778 \ (6-1) = 55755.6 thousand rubles.

You can also calculate the average residuals:

Osr '= (Residues at the beginning + Residues at the end) / 2 = (45880 + 39110) / 2 = 42495 thousand rubles.

Turnover and methods of its calculation

The liquidity indicators of the company depend on the speed of conversion of funds invested in reserves into real money. To determine the liquidity of stocks using the coefficient of turnover. It is calculated according to different parameters (cost, quantity), periods (month, year), for a single product or an entire category.

There are several types of turnover:

• the turnover of each product in any quantitative indicators (pieces, in volume, weight, etc.);
• turnover of goods at cost;
• inventory turnover in quantitative terms;
• inventory turnover at cost.

In practice, the following formulas are most often used to determine the efficiency of using stocks:

1) The classic formula for calculating the turnover:

T = (Inventory balance at the beginning of the period) / (Monthly sales)

2) Average turnover (calculation formula for the year, quarter, half year) :

Tk avg = (TK1 + ... + T3n) / (n-1)

3) The turnover period:

ABOUT days = (Average turnover * Number of days in the period) / Sales volume for the period

According to this indicator, the number of days that are necessary for the sale of stocks is calculated.

4) Turnover at times:

About p = Number of days / About days = Volume of sales for the period / Average turnover

This coefficient shows how many revolutions the product makes for the period under review.

The higher the turnover, the more efficient is the organization, the less is the need for capital, and the more stable is the position of the enterprise.

5) Stock Level:

Uz = (Inventory at the end of the period * Number of days) / Turnover for the period

The level of stocks characterizes the security of the company with goods at a certain date. It shows how many days the organization has enough stocks to trade.

Features

The formula for calculating the turnover and other indicators presented above is used subject to the following conditions:

• If the organization does not have stocks, then it makes no sense to calculate the turnover.
• Retail turnover, the calculation formula of which will be presented later, may not be determined correctly if it includes targeted deliveries of goods. For example, a company won a tender for the supply of materials to a shopping center. A large consignment of plumbing was brought under this order. These products should not be taken into account when calculating turnover.
• The calculation takes into account the live stock, that is, the goods that arrived at the warehouse were sold, and those for which there are leftovers, but there was no movement.
• The turnover of goods is calculated only at purchase prices.

Example 2

The conditions for the calculations are presented in the table.

Define the turnover period in days. In the analyzed period of 180 days. During this time, 1701 goods were sold, and the average monthly balance amounted to 328 pieces:

SAT = (328 * 180) / 1701 = 34.71 days

That is, from the moment a product arrives at the warehouse until it is sold, it takes an average of 35 days.

Calculate the turnover in times:

OB times = 180 / 34.71 = 1701/328 = 5.19 times.

For six months, the stock of goods is wrapped up on average 5 times.

Define the level of stocks:

Uz = (243 * 180) / 1701 = 25.71.

Available stocks of the organization will be enough for 26 days of work.

Destination

The inventory turnover is analyzed in order to find positions in which the speed of the cycle "commodity-money-commodity" is very low, and make the appropriate decision. It does not make sense to analyze products of different categories in this way. For example, in a grocery store, a bottle of cognac can be sold at a faster rate than a loaf. But this does not mean that bread should be excluded from the assortment of goods. Simply analyzing these two categories in this way is not necessary.

Compare the following products within the same category: bread - with other bakery products, and cognac - with elite alcoholic beverages. Only in this case can we draw conclusions about the intensity of the turnover of a particular product.

An analysis of the dynamics of sales in comparison with previous periods will allow us to conclude that there is a change in demand. If during the analyzed period, the turnover ratio decreased, then there is an overstock warehouse. If the indicator is growing and also at a fast pace, then we are talking about working “off the wheels”. In conditions of shortage of goods, stocks can be zero. In this case, inventory turnover can be calculated in hours.

If seasonal goods have accumulated at the warehouse, for which there is a low demand, then it will be difficult to achieve turnover. You will have to purchase a wide range of rare goods, which will affect their liquidity. Therefore, all calculations will be incorrect.

It is also important to analyze the terms of delivery. If the organization purchases at its own expense, the calculation of turnover will be indicative. If goods are bought on credit, then low turnover for the company is not critical. The main thing is that the refund period does not exceed the calculated coefficient value.

Types of turnover

Exactly the same as prices are divided into retail and wholesale, commodity circulation is divided into two similar types. In the first case, we are talking about the sale of goods in cash or at standard prices, and in the second - the sale by bank transfer or at wholesale prices.

Methods

In practice, such methods of calculating the turnover are used:

• Based on the consumption of goods by residents of one district.
• According to the planned number of sales and average unit cost.
• According to the actual turnover of the organization (the most popular method).

Data for calculations are taken from accounting, statistical reporting.

Dynamics

The following formula for calculating the turnover shows the change in current prices:

D = (The fact of the turnover of the current year / The fact of the turnover of the last year) * 100%.

The dynamics of trade in comparable prices is determined by the following formula:

D sop = (Fact of goods turnover in comparable prices / Fact of goods turnover of the last year) * 100%.

Example 3

You need to calculate the dynamics of turnover and the percentage of completion of the sales plan. There is such data:

- Commodity turnover of 2015 - 2.6 million rubles.
- Sales forecast for 2016 - 2.9 million rubles.
- Turnover of 2016 - 3 million rubles.

Decision:

- Determine the percentage of completion of the sales plan : (3 / 2,8) * 100 = 107%.
- We will calculate the turnover at current prices: (3 / 2.6) * 100 = 115%.

Price index

If prices have changed during the study period, then you must first calculate their index. The value of this indicator increases under the influence of inflationary processes on the country's economy. The coefficient shows the change in the value of a certain quantity of goods for the period. The formula for calculating the price index:

Its. = C new / C old

This formula is often used by statistical authorities to analyze the price level of certain categories of goods. For example, the volume of goods sold in 2014 amounted to 100 thousand rubles, and in 2016 - 115 thousand rubles. Calculate the price index:

Its = 115/100 = 1.15, that is, over the year prices rose by 15%.

Only after these actions the formula for calculating the turnover in comparable prices is used:

Fact = (Turnover at current prices / Turnover of the previous year) * 100%.

Example 4

In 2015, the company's turnover amounted to 20 million rubles, and in 2016 - 24 million rubles. During the reporting period, prices rose by 40%. It is necessary to calculate the turnover according to the previously presented formulas.

We will determine the wholesale turnover at current prices. Calculation formula:

TT = 24/20 * 100 = 120% - for the current year, trade grew by 20%.

We calculate the price index: 140% / 100% = 1.4.

We define the turnover in comparable prices: 24 / 1.4 = 17 million rubles.

The formula for calculating the turnover in dynamics: 17/20 * 100 = 85%.

The calculation of the dynamics showed that the increase occurred only due to an increase in prices. If they had not changed, commodity circulation would have decreased by 17 million rubles. (by 15%). That is, there is an increase in prices, not the number of goods sold.

Example 5

The source data for the task are presented in the table below.

Now you need to determine the turnover for the current year at prices of the previous period.

First, we determine the percentage of completion of the sales plan: 5480/5300 * 100 = 103.4%.

Now we need to determine the dynamics of trade in percent in comparison with 2015: 5480/4650 * 100 = 120%.

As a result of overfulfillment of the sales plan in 2016, the company sold products worth 180 thousand rubles. more. Over the year, sales increased by 920 thousand rubles.

A detailed calculation of retail turnover by quarters allows you to determine the uniformity of sales, to identify the degree of satisfaction of demand. In addition, it is also worthwhile to analyze the sales by months to establish signs of a decrease in demand.

Retail Sales Calculation Formula

Analysis of price changes for product groups provides a quantitative and cost assessment of individual products, determining the dynamics of their shifts. The results of the study are used to study the correspondence of supply to demand and have an impact on the formation of orders.

Analysis of turnover is carried out according to quarterly and annual reports. Based on the results of the audit, it is possible to establish the reasons why the turnover has changed. The formula for calculating the balance sheet is given below:

+ + = + + + + , where
Zn (k) - reserves at the beginning (end) of the planning period;
NT - commodity allowance;
Pr - the arrival of goods;
P - the sale of goods in separate groups;
B - disposal of goods;
B - natural decline;
U - markdown.

You can determine the degree of influence of the balance sheet indicators by calculating the difference between the planned and actual indicators, or using the chain substitution method. At the next stage, retail turnover, the calculation formula of which was presented above, is analyzed for changes as a result of improved labor productivity, an increase in the number of employees and the efficient use of fixed assets. The analysis ends with determining the prospects for growth in sales and changing the structure of goods.