QuickBooks Enterprise v24 (aka: 2024) contains multiple tools to help Users manage and track their inventory. One recent enhancement is the Inventory Turnover by Item report.
The Inventory Turnover by Item report measures how effectively your company uses inventory. This report will help you:
- Understand how your inventory items are selling
- Determine the number of days it takes to sell items in your inventory
- Date when the inventory was last sold or invoiced
- Determine best options for reorder points, quantities, and prices
- Minimize inventory-related risk to improve financial stability.
Using the QuickBooks Enterprise Inventory Turnover Report
Note: To run the Inventory Turnover by Item report, you first must have the Inventory functionality preference configured for your company.
Running the Inventory Turnover by Item Report (Step-by-step):
1) From the QuickBooks Enterprise menu, select Reports.
2) Within the Reports menu, choose Inventory.
3) When Inventory menu opens, select the Inventory Turnover by Item report.
4) Before the actual Inventory Turnover by Item report is generated, QuickBooks displays the report information window. After reading the report you can click the blue Continue button. (Optionally, check the "Don't show me this again" checkbox to omit this step in the future.)
5) When the Inventory Turnover Report opens, choose Customize to add or remove Display columns,
Note: In the example shown above, we had de-selected the 'Category' column to be displayed in our report.
6) You can also add Column Filters for the report within the Customize settings.
Note: In the example shown above, we have chosen to filter the report for a specific' Last Sell Date range that differs from the report date range.
What the Inventory Turnover Report Displays
The Inventory Turnover report displays two critical values needed to give you better insights into your inventory. The report computes the Inventory Turnover Ratio and Inventory Turnover Days
Inventory Turnover Ratio
Inventory Turnover Ratio: = Total cost of goods sold (COGS) / Average inventory value [over time*].
- The Average Inventory value: = (Beginning inventory value + Ending inventory value) / 2.
For example: if the COGS is $5000 over a year, and the Average inventory value is $2000 during the same time, the Turnover ratio will be ($5000/$2000) = 2.5. In this hypothetical, your business should be able to sell and replenish inventory 2.5 times a year.
Inventory Turnover Days
Inventory Turnover Days: = Number of days [in the period*] / Inventory turnover ratio.
- For example, if the Inventory turnover ratio above, the Inventory turnover days will be (365/2.5) = 146 days. Hypothetically, his means your business takes 146 days to sell its inventory.
Interpreting Turnover-related Computations.
A higher Turnover ratio or lower number of Turnover days means your inventory is selling quickly,
A lower Turnover ratio or higher number of Turnover days means it takes longer to sell your inventory.
* - in all such cases, the period or over time value is computed from the reporting period of the Report.
Disclosures:
Feature content was adapted from Intuit Help' and other media source content within QuickBooks Desktop Enterprise. Content created or otherwise adapted by Insightful Accountant from Intuit source content is furnished for educational purposes only.
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