2. Days of inventory outstanding (DIO)
a working capital management ratio that
measures the average number of days
that a company holds inventory for
before turning it into sales. The lower
the figure, the shorter the period that
cash is tied up in inventory and the lower
the risk that stock will become obsolete.
4. Sell through rate
Measures the amount of inventory
you've sold in a month versus the
amount of inventory shipped to you
from a manufacturer. The sell-
through rate is an important retail
sales metric that allows you to
monitor the efficiency of your supply
chain.
6. Take away thoughts in DIO
If DIO is high, the company's cash is tied up in inventory for
extended periods, meaning it cannot be deployed for other
purposes. A high DIO may also be associated with overstocking,
leading to higher than necessary storage costs and a high level of
obsolete stock that may never be sold. A higher DIO can mean that
inventory isn't being managed properly.
A lower DIO indicates that your business is more efficient at selling
inventory. A lower DIO indicates that ordering is efficient within the
company.
7. Take away thoughts in StR
A high rate in STR means an indication that a business
sells most of its inventory received in a period. Therefore,
it does not need to spend a lot of money to stock excess
inventory. Note that the sell-through rate can indicate
problems with moving inventory, but it does not reveal the
causes.
Low rate in STR means an indication that a retailer isn't
selling those products as quickly as they expected.
8. Simple Problem 1
Gi takigan Electronics has an average inventory
cost of ₱4,000,000 and a cost of goods sold (COGS)
of ₱18,000,000 for the fiscal year. Additionally, the
company made 800 sales during this period, and
the total sales on stock amounted to ₱22,000,000.
Calculate both the Days of Inventory Outstanding
(DIV) and the Sell-Through Rate (STR)
9. Simple Problem 2
Istitik ka Gurl Corp operates in the fashion industry and
faces seasonal fluctuations in demand. The company has an
average inventory cost of ₱3,500,000 for its premium
collection. The cost of goods sold (COGS) for the premium
collection throughout the year is ₱12,000,000. The company
recorded 8,000 unit sales during the year, and the current
sales on stock are 1,200 units. However, 300 units were
damaged due to unforeseen circumstances.
Calculate the adjusted Days of Inventory Outstanding (DIV)
and the Sell Through Rate (STR) using the provided formulas
10. Simple Problem 3
LDR ra jud mo kutob, a technology retailer, has
an average inventory cost of ₱4,500,000 and a
cost of goods sold (COGS) of ₱25,000,000 for
the fiscal year. The company made 75,000 sales
transactions during the same period for
inventory turn-over.
Calculate the Days of Inventory Outstanding
(DIV) and the Sell Through Rate (STR).
11. Simple Problem 4
Pandamay Corporation is a multinational retailer.
The average inventory cost for their flagship
product line is ₱2,000,000. The annual cost of
goods sold (COGS) for the specific product category
is ₱8,500,000. The company recorded 5,000 unit
sales during the fiscal year, and the current sales on
stock stand at 800 units. Additionally, the company
had to write off 100 units due to product defects.
Calculate the Days of Inventory Outstanding (DIV)
and the Sell Through Rate (STR)
12. Simple Problem 5
Nakurentihan najud, a high-tech electronics manufacturer,
faces a complex supply chain scenario. The average
inventory cost for their flagship product line is₱ 5,000,000.
The annual cost of goods sold (COGS) for the product
category is ₱20,000,000. Throughout the year, the company
experienced significant demand fluctuations. The total
number of sales reached 10,000 units, but due to supply
chain disruptions, the current sales on stock stand at 800
units.
Calculate the Days of Inventory Outstanding (DIV) and the
Sell Through Rate (STR)
13. Bonus Problem
Choco.ice Manufacturing Co.has an average
inventory cost of ₱750,000 and Annual Sales of
₱7,750,00O and a Cost of Goods Sold (COGS) is
95% Of Annual sales and 5% is from inventory
Cost. During the year, the company sold 2,000
units each for the two product. The total sales
on stock amounted to ₱2,200,000.
Calculate the Days of Inventory Outstanding
(DIV) and the Sell Through Rate (STR)
