Inventory Evaluation Methods in Distribution

The next issue is the determination of profit. The correct stock of goods makes our profit and loss to be provided correctly. When you have enough inventory, you have less expiration date, less expiration date, and this makes your profit to be optimized and practically you don’t incur any loss due to inventory. 

Also, if you assume the inventory of the goods, you have purchased the goods on time and delivered them to the customer, apart from the fact that you contribute to the market share and it also gives you working capital, it also increases your profit.

 So, these 4 items, i.e. inventory, market share, working capital, and profit determination, which is the goal and mission of every broadcasting company, are all related to each other and to the profitability of your organization, to your working capital, your expansion in the market, to the share The market and the strategies you have to influence and maintain and take care of your name will help.

What systems do we have now to calculate inventory? Basically we have two famous systems. One is periodic system and one is permanent system. In permanent systems, the entry and exit of goods is so much that it is not controlled.

 Basically, for those places that could not declare their own products, a periodic system was registered for this method, it was fixed and it became popular in organizations. But in broadcasting organizations, we need both systems. Both a permanent system, which is our accounting system, and a periodic system.

In the periodic system, in any case, we have to stock up every month. For this, we have to check the system data once again during the period by objectively counting the goods (for example, in distribution organizations that have a large number of goods, group them into group, for example, today the group of beverages, including Coca Cola, will be counted once again) let’s reprice.

 Why? Different batch numbers, different series, or the inflationary conditions of the economy that exist now, make us have to re-price. This method is a periodic system, and every month in distribution organizations, warehouse managers and warehouse supervisors do this periodic system work, and this is matched with the permanent system that we have, which is the total entry and exit, and the balance at the beginning of the period and the balance at the end of the period, at the same time and It is always checked with each other.

We have explained the method of calculating at the end and how it is. In periodic systems, they check the sale of goods. Of course, it means net sales. It means the sale minus the return from the sale and its discounts. Then they calculate the inventory of the first period plus the net purchase (which is the purchase of the item, minus the returns from the purchase and its discounts), that is, they add the net purchase to the first period balance. 

A figure is obtained, which is usually called the finished goods ready for sale. Then the goods ready for sale are deducted from the cost price. How much do we have at the end of the period? This amount is the cost price of the goods sold, and this is subtracted from the net sales, and you get the unrealized profit or loss. Financial expenses, expenses such as distribution, administrative sales are subtracted from it. Special profit or loss is obtained.

● The method of calculation is the same in both systems. With the difference that in the periodic system, this is done at the end of the period, but in the permanent and continuous systems, continuously and consecutively, at every moment, the same calculations are done by the systems and computers, and it actually shows this figure. 

The only thing broadcasting companies need is to combine these figures with periodic systems to be able to do this and be more accurate. For example, we showed a pattern of profit and loss in broadcasting companies in the form of a diagram.

● For example, buying goods: we buy goods, we pay the shipping fee, we pay the transfer fee. We pay the unloading fee, we pay the loading fee… and these costs are added to the purchase of the goods. This is our inventory but at the finished price. On the other hand, some necessities are probably consumed. 

For some companies, we need to give a series of goods as a promotion, to give a series of things for promotion. It needs a bunch of things, it needs packaging. These are all divided together and the sales we made are subtracted from the sales figure. We subtract the cost of goods sold from the net sales and get the profit and loss.