The Pros And Cons Of Using The Modern Accounting Method

The inventory turnover ratio is an efficiency ratio that shows how effectively inventory is managed by comparing cost of goods sold with average inventory for a period. This measures how many times average inventory is "turned" or sold during a period.

In general, a high inventory turnover ratio is better than a low ratio. A high ratio implies good inventory management. A very low level of inventory has serious implications. It adversely affects the ability to meet customer demand as it may mot cope up with its customer requirements.

Lastly, the just-in-time (JIT) approach is an operating philosophy that requires that all resources, including materials, personnel, and facilities, be acquired and used only as needed (Mazumder, 2007). The JIT approach works great for manufacturing companies because of their common classes of material that they use which are raw materials, work-in-process, and finished goods (Mazumber, 2007). According to JIT concept raw materials are received just in time to go into production, manufactured parts are completed just in time to be assembled into products, and products are completed just in time to be shipped to customers (Mazumber, 2007). The

There are various reasons for holding inventory. Inventory acts as a buffer between supply and demand fluctuations and irons out supply chain system failures. The smoother your supply chain operates and the better you are able to forecast the less inventory you have to hold, unless you gain some economies of scale in purchasing, transportation and or manufacturing. Especially for supermarket, holding inventory can lead to customer satisfaction and increase their loyalty. Customers tend to stop by most often at supermarket where they surely know the item is available.

Using ABC also allows the company to use the Just in Time (JIT) system. This system allows ensures materials are purchased just in time to produce the products, and products are completed just in time for delivery. JIT uses the demand-pull system to receive the order, schedule production, delivered materials, and finished product delivered to the customer. This lessens the amount of excess parts and inventory saving the company money as well.

In regards to inventory turnover in 2009, CVS experienced a favorable amount of inventory on hand compared to cost of goods sold. When comparing this result to 2011 it climbed to 10.66, which improves the company’s regulation of managing inventory. From 2009 to 2010 there was an improvement

Critically examine the above statements by analysing the contribution of traditional management accounting techniques in an organisation, the necessity for modern management accounting techniques and the role of accountants in the implementation of the modern management accounting techniques in an organisation.

Just In Time (JIT): A just in time approach maintains only required inventory in demand; it uses previous year’s statistics to dictate the amount of inventory to be kept on hand (Business.com). The benefits of a just in time approach are that it reduces inventory, shipping fees, depreciation, and doesn’t waste product.

The inventory turnover is a ratio showing how many times a company´s inventory is sold and replaced over a period.“ The inventory turnover has been fairly stable over the last 5 years.

My inventory control procedures provided both increased revenues and cost savings. Quite simply, I ordered adequate levels of products which were in high demand, I was able to better meet customers’ needs, and my revenues increased. The cost savings I experienced as a result of my inventory control procedures were a bit more complex. First, in establishing a routine schedule for ordering, I was able to reap the benefits of lower shipping costs. Because I had a routine schedule, I could

The Inventory turnover ratio is one of the more important ratio to look at in this industry because it represents how fast a company can sell its product after it is produced. This industry is all about getting the product out into the market as fast as possible without compromising the quality. The higher the ratio the better the company is at getting the product produced and sold to the consumer. In this area, Costco inventory is right on the average for the years 2013-2017. Compared to its top competitors and the average of all three as a whole. The tables below show the turnover

Inventory turnover ratios are the number of times a business sells and replaces its inventory. The inventory turnover was four times above industry average, but has since decrease below industry level for 2013 through 2016.

Second, excess inventory will be reduced on items that have a lower demand. Third, there should be enhanced credibility with customers due to the better availability of product. Forecasting should also benefit scheduling and labor needs for production. Ultimately, there should be an increase in inventory for products with high demand, a decrease in overall inventory, and reduced operating expenses.

The company also reduces inventory management cost by maintaining low inventory or just-in-time inventory which is a good technique to gain competitive advantage.

advantage of this is there will be no need to store large quantities which will give you the benefit of needing inventory space and will keep inventory costs low