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Essay / Research Paper Abstract
This 3 page paper is based on a case study supplied by the student, assessing the inventory control at a firm over two years. Using figures supplied the student the paper demonstrates the way in which inventory turnover and the ‘days inventory’ can be calculated, interprets the results and identifies used in the accounts to calculate a value for the inventory. The bibliography cites 1 source.
Page Count:
3 pages (~225 words per page)
File: TS14_TEtoppsinv.doc
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Unformatted sample text from the term paper:
turnover is usually calculated by taking the sales divided and dividing them by the stock (or the average stock for the year). In this case we will use the closing
stock. The performance for Topps for 2005 and 2006 are shown below1 Table 1 Inventory Turnover for Topps 2005 and 2006 2005 2006 Sales (a) 294,231 293,838 Closing
inventory (b) 32,936 36,781 Inventory turnover a/b 8.93 7.99 This shows us that the firm is turning over the entire inventory 7.99 times a year, whereas it was 8.93 in
2005. When assessing management of inventory efficiency, the measurement of inventory days may also be used. This is a ratio that assesses how may days worth of sales the firm
can supply from their existing inventory. This is also a relativity simple calculation. The average time of the stock being held can be calculated by taking the stock and
dividing it by the sales, then multiplying this by 365. Changes in this may need to be investigated, especially if there is a decline in the performance. 2005
2006 Closing inventory (a) 32,936 36,781 Sales (b) 294,231 293,838 Days inventory (a/b) x 365 40.86 45.69 This tells us that in 2005 the firm held 40.86 days of inventory
and in 2006 it is 45.69 days of inventory Part B When looking at the ratios it is apparent that the management of the inventory appears to be declining.
Both measures support each other, showing decreased efficiency; the firm is taking longer to turn over the inventory, in 2005 the firm would turn the inventory over 8.93 times each
year, by 2006 this has declined to 7,99 times per year. The lower performance is also seen in the measurement of days inventory. There are an increased number of days
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