Use the Inventory Turnover report in QuickBooks Enterprise 2024

There are multiple reports to help you manage and track your inventory in QuickBooks Enterprise 2024. Intuit just added the inventory turnover report as of June 25th, 2024 to measure how effectively your company uses inventory. This report will help you understand how many days it takes to sell items in your inventory and make knowledgeable choices on reorder points, quantities, and pricing. This helps you minimize inventory-related risk to improve financial stability.

Let’s go through each column of the report and what the numbers represent:

First go to Reports, Select Inventory then Inventory Turnover by Item Report

• The first column of the report lists the individual inventory item name with the description showing in the next column along with any category you have chosen for that item.
• The last sell date shows when the inventory was sold last / invoiced.
• The cost per unit is the cost you have listed on the inventory part item.
• The Sales Price is the price listed on the inventory part item.
• The Quantity on Hand is the amount currently available in inventory.
• The Reorder point min and max will show if you have them entered within the item.
• The COGS is the amount sold during the period * The Average Cost.
• The Closing Stock is the amount of inventory available * the current average price.
• Opening Stock is the Asset Value at the inventory turnover beginning date.
• Purchases is the closing stock amount minus the opening stock amount.
• The Average Inventory value is the sum of the beginning and ending inventory values divided by 2.

Now let's talk about turnover ratio and turnover days.

• Inventory Turnover Ratio is calculated by the total cost of goods sold (COGS) over the specified time frame divided by the average inventory value over a while. Let’s go through this in detail.
• The Average Inventory value is the sum of the beginning and ending inventory values divided by 2. For example, in this example, the COGS is $4,380.36 over the period, and the average inventory value is ($2,894.64 + $2,375.00)/2 = $ 2.634.82. The turnover ratio will be ($4380.36/$2634.82) =1.6624892782. This means your business can sell and replenish your inventory item 1.66 times a year.
• Inventory Turnover Days is calculated by the number of days in the period divided by the inventory turnover ratio.
• For example, with the inventory turnover ratio above, the inventory turnover days will be (365/1.66) =219 days. This means that your business takes 219 days to sell the inventory.

A higher turnover ratio or lower number of turnover days such as this wall Lantern means your inventory is selling quickly, while the opposite means it takes longer to sell your inventory.

This feature is only available with QuickBooks Enterprise Editions.

With all the different software solutions that QuickBooks offers, it’s difficult to get unbiased advice regarding the best software solutions for your business. Sign up for a free consultation to go through your current processes and to see if we can save you time and money.