Formula for calculating turnover and examples

One of the indicators that characterizes the company's sales dynamics is turnover. It is calculated in sales prices. The analysis of commodity turnover gives an estimation of qualitative and quantitative indicators of work in the current period. From the conclusions drawn depends the validity of calculations for future periods. Let's consider more detailed methods of calculation of commodity circulation.

Inventory turnover

All that is in the warehouse, is the working asset of the organization. This is frozen money. To understand how much time will take to convert goods into cash, an analysis of stock turnover is conducted.

The presence of commodity balances on the one hand is an advantage. But even when they accumulate, sales are declining, organizations still have to pay taxes on inventories. In such cases, they say low turnover. At the same time, the high speed of selling goods is not always a big advantage. With the increase in turnover, there is a risk that the customer 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 the inventory turnover.

The terms

A commodity 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.).

Stocks are a list of goods that can be sold. For organizations engaged in retail and wholesale trade, stocks are goods lying on shelves, and those that are available are supplied and stored.

The term "commodity stock" also includes products that are still on the road, in the warehouse or are listed as receivables. In the latter case, the ownership remains with the seller until the goods are paid. Theoretically, he can ship it to his warehouse. When calculating the turnover, only those products that are in the warehouse are taken into account.

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

Example 1

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

Month	Commodity stock, thousand rubles.
January	45880
February	40667
March	39787
April	56556
May	56778
June	39110
Total	278778

Average Commodity Stock:

Тз ср = 278778 \ (6-1) = 55755.6 thousand rubles.

You can also calculate the average balances:

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

Wrapping capacity and ways of its calculation

Indicators of liquidity of a firm depends on the speed of transformation of funds invested in stocks into live money. To determine the liquidity of the stocks, the ratio of commodity turnover is used. It is calculated by different parameters (cost, quantity), periods (month, year), one product or the whole category.

There are several types of turnover:

• Turnover of each product in any quantitative indicators (pieces, by volume, weight, etc.);
• Turnover of goods at cost;
• Turnover of the entire stock in quantitative terms;
• Turnover of the entire stock at cost.

In practice, most often such formulas are used to determine the efficiency of the use of stocks:

1) The classical formula for calculating turnover:

T = (Balance of inventory at the beginning of the period) / (Sales per month)

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

T3 cp = (TZ1 + ... + T3n) / (n-1)

3) Turnover period:

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

By this indicator, the number of days necessary for the sale of stocks is calculated.

4) Turnover times:

About p = Number of days / OB dn = Sales volume for the period / Average turnover

This ratio shows how many revolutions the product makes over the period under review.

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

5) Stock level:

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

The level of stocks characterizes the firm's supply of goods on a certain date. It shows how many days of trade the organization has enough stocks.

Features

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

• If the organization does not have stocks, then there is no sense in calculating turnover.
• Retail turnover, the formula for calculating which will be presented below, can be determined incorrectly if targeted deliveries of goods are included in it. For example, the company won a tender for the supply of materials to the shopping center. A large consignment of plumbing was brought under this order. These goods 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 realized, and those for which the balances are listed, but there was no movement.
• The turnover of goods is calculated only at purchase prices.

Example 2

The conditions for calculations are presented in the table.

Month	Implemented, pcs.	The remainder, pcs.
January	334	455
February	317	412
March	298	388
April	250	235
May	221	256
June	281	243
TOTAL	1701
Average supply		328

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

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

That is, from the moment the goods arrive to the warehouse, an average of 35 days passes before it is sold.

We calculate turnover in times:

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

For half a year the stock of the goods turns around on average 5 times.

Define the level of stocks:

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

There are enough stocks of the organization for 26 days of work.

Purpose

The inventory turnover is analyzed in order to find the positions in which the cycle speed of the "commodity-money-commodity" is very low, and make the appropriate decision. Analyze this way, goods of different categories do not make sense. 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 the bread should be excluded from the assortment of goods. It is not necessary to analyze these two categories in this way.

Compare the following products in the same category: bread - with other bakery products, and cognac - with elite alcoholic beverages. Only in this case it is possible to draw conclusions about the intensity of turnover of a certain commodity.

Analysis of the dynamics of sales in comparison with past periods will lead to a conclusion about a change in demand. If the turnover ratio decreased during the analyzed period, then the warehouse is overstocked. If the indicator grows and at the same rapid pace, then it is a question of work "from the wheels". In conditions of commodity deficiency, stocks can be zero. In this case, the inventory turnover can be calculated in hours.

If seasonal goods accumulate in the warehouse, for which there is a low demand, then it will be difficult to achieve turnover. We 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 from its own funds, the calculation of turnover will be indicative. If the goods are bought on credit, then the low turnover for the firm is not critical. The main thing is that the repayment period does not exceed the calculated value of the coefficient.

Types of turnover

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

Methods

In practice, these methods of calculating turnover are used:

• Based on the consumption of goods by residents of one area.
• According to the planned number of sales and the 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 turnover shows the change in the indicator at current prices:

D = (Actual turnover of the current year / Actual turnover of the previous year) * 100%.

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

Д соп = (The fact of commodity turnover in comparable prices / The fact of commodity turnover of the last year) * 100%.

Example 3

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

- Trade turnover 2015 - 2.6 million rubles.
- Forecast of sales for 2016 - 2.9 million rubles.
- Trade turnover of 2016 - 3 million rubles.

Decision:

- Define the percentage of implementation of the sales plan: (3 / 2.8) * 100 = 107%.
- We will calculate the turnover in current prices: (3 / 2,6) * 100 = 115%.

Price Index

If prices changed during the analyzed period, then their index should be calculated first. The value of this indicator increases in the context of the impact of inflation on the economy of the country. The coefficient shows the change in the value of a certain quantity of goods per period. The formula for calculating the price index:

Itc. = C new / C old

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

Иц = 115/100 = 1,15, that is, for the year prices rose by 15%.

Only after these actions the formula of calculation of commodity circulation in the comparable prices is used:

Fact = (Turnover in 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 increased by 40%. It is necessary to calculate the turnover of the previously presented formulas.

Determine the current commodity turnover at current prices. Calculation formula:

Тт = 24/20 * 100 = 120% - for the current year the commodity turnover has grown by 20%.

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

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

Formula for calculating turnover in dynamics: 17/20 * 100 = 85%.

The calculation of the dynamics showed that the growth occurred only due to the increase in prices. If they had not changed, the turnover 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 initial data for the task is presented in the table below.

	Turnover for 2015, thousand rubles.	2016 year
		Forecast, thousand rubles.	Fact. Turnover, thousand rubles.
Total	4560	5300	5480
I quarter	1000	1250	1260
II sq. M	1300	1290	1370
III sq. M	1100	1240	1210
IV kV	1158	1519	1640

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

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

Now we need to determine the dynamics of commodity turnover in percent compared to 2015: 5480/4650 * 100 = 120%.

	Turnover for 2015, thousand rubles.	2016 year
		Forecast, thousand rubles.	Fact. Turnover, thousand rubles.	Performance, %	In relation to the last year,%
Total	4560,00	5300,00	5480.00	103.4	120
I quarter	1000.00	1250,00	1260.00	100.8	125
II sq. M	1300,00	1290,00	1370.00	106.2	105
III sq. M	1100,00	1240.00	1210,00	97.6	109
IV square	1158.00	1519.00	1640.00	107.9	141

As a result of overfulfilment of the sales plan in 2016, the company sold products for 180 thousand rubles. more. For the year the volume of sales increased by 920 thousand rubles.

Detailed calculation of retail turnover by quarters allows to determine the uniformity of sales, to reveal the degree of satisfaction of demand. In addition, it is also worthwhile to analyze the sales by months to establish signs of a decline in demand.

Formula for calculating turnover in retail trade

Analysis of changes in prices for commodity groups provides for a quantitative and cost evaluation of individual goods, determining the dynamics of their shifts. The results of the research are used to study the suitability of the supply to demand and influence the formation of orders.

The analysis of commodity circulation is conducted on quarterly and annual reports. Based on the results of the audit, you can determine the reasons for the change in turnover. The formula for calculating the balance is given below:

3H + Hm + Pr = P + B + B + Y + 3K, where
Зн (к) - stocks on the beginning (the end) of the planned period;
Нт - commodity extra charge;
Pr - the arrival of goods;
P - realization of goods by separate groups;
В - disposal of goods;
B - natural loss;
Y - markdown.

Determine the degree of influence of balance indicators can be calculated by calculating the difference between planned and actual indicators, or using the method of chain substitutions. At the next stage, retail turnover, the formula for calculating which was presented above, is analyzed for changes as a result of improved labor productivity, an increase in the number of employees and efficiency in the use of fixed assets. Analysis ends with determining the prospects for growth in sales and changes in the structure of goods.