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greenoak
01-02-2009, 08:28 AM
right now i have our year end sales numbers and our inventory.both in their different categories....its all on paper by category , by month, by year...even a few charts......dh was so good this year!!! our profit was up even tho some parts were down,due to things we have dropped...
i dont care about what he needs for the accountant.the financial statement etc.... for his uses.....im talking about me....
. for general planning for the year...... how would you use these numbers? ...
if you had these numbers in front of you what would you look for?
any benchmarks out there?

also i can look back at , say our cupboards, for total sales in each year.....
im definitely wanting to compare space to sales....and inventory to sales....
naturally im looking for ways to buy in the best ways i can this coming year...
thanks

ann

orion_joel
01-02-2009, 07:38 PM
Maybe some of the things to look at may include the following.

- If a category dropped off a little look to see if it is because you stocked less for that category, or if there was a pricing change from a supplier that you passed on, also if the actual profit dropped or increased compared to the sales drop.

- If you have a category that seems to be increasing then maybe look to be stocking in this category more. If a category is increasing then you would possibly hope that the increase is because it is more popular. The more data that you have for something like this the better, often just looking at ones years figures is a little bit deceptive, unless it has a break down by month of the different categories.

- Finally, make your purchases based on inventory, if you have a lot of product in one category, then you should look to try and sell some from that category before buying in more, However if that category has high sales, and high inventory, this can be good and the the reason the sales are high is because you have high inventory and a lot of variety in that category.

Really i think though ann, while you may be able to use this information to some extent, for the most part i think using you skills, in knowing this business that you are in is going to be just as much a part of your plan for buying in the coming year as any figures. From what i have read in your posts and such you seem to do fairly good at your buying.

Evan
01-02-2009, 11:09 PM
- Analyze the quantity of your beginning and ending inventory (by category), and determine whether these are the levels you want. If you have several years worth of information, you may want to compare these against each month. Perhaps there is a trend with category X that it sells more in February/March than any other time.

- Analyze the value ($$$) of your beginning and ending inventory (by category), and figure out what the change was. Did certain costs rise? Compare the cost against sales sales to determine your profitability, and look at a prior year. Did your profit rate go from 20% to 10% on this ctegory? If so, perhaps you need to adjust your selling price? Maybe not, as that can directly affect the number of sales.

Your inventory and sales are very much related, and if there are trends you notice from year-to-year with regards to sales, you can purchase things at that time during the year.

You should also be able to calculate your inventory turnover ratio (how many times inventory turned over during the year) and average days to sell inventory as follows:

Inventory Turnover = Cost of Goods Sold / ((Beginning Inventory + Ending Inventory)/2)
Average Days to Sell Inventory = 365 / Inventory Turnover

These numbers can sometimes surprise you. Ideally, inventory turnover would be high, making average days low. But it's not always the case. If you were really interested to look further, you could research similar companies and find what is standard in your particular industry.

greenoak
01-03-2009, 09:22 AM
THANKS......im looking forward to working on this in the coming week..and im tossing your ideas into the percolator......before i go out to the shows....
there is something about this time of year...the looking back, the figuring out, the making final opinions and plans, that sets the course for the year
... i have about 3 equal categories in sales.... so that will be my starting point...
so much of this can be looked at in so many ways...i guess thats where the owners intuition /the gardner walking thru the garden/...comes in....


then there are the total contradictions and what the hecks...like we spent 5,000 less on advertizing this year and our retail went up....

my background and training is at auction, where you make so many judgements and fast... and in the old days on saturday nights, guys would be waiting in the driveway for me , waiting to see what i got at the auction,my trucklkoad, and ready to buy, and i had to be able to price everythng on the spot...with no paper...which i could always do , whether i was exhausted from the auction or not, they probably hoped i was t oo dazed from the day to get it all right!!! im sure i made some mistakes... .... ....so im real used to going on judgement or guesses or whatever you call it...thats easier for me than getting all the details that would be nice to have...like a pos system....
back then our turnover was amazing....now its much lower, but now we have tons more inventory and make a lot more money...
ann