A Guide on Benefits of Recording Product Turnover Rates
Every business has some services and products to sell. The number of sales made in a day or a given period determines whether a business is operating its tasks well or not. If the number of sales is lower than the number of products you manufactured, then it means there is something wrong with your tasks.
To know whether you are making sales enough, you need to do some calculations and keep records to help make these calculations. Every business has a professional bookkeeper and accountant to perform these tasks to make future decisions easier.
Dig deep into this article to enlighten yourself with some benefits of recording product or inventory turnover rates.
Top 6 benefits of recording product turnover rates in your books
Every business is involved with some day-to-day transactions. These transactions play a key role in defining the future of any business. These transactions need to be recorded because these records help the decision-makers look at the pain points and point for any business. You must have correct information on your sold products and the products left in stock to ensure your business decisions are in your favor.
Below are some of the key and important benefits of recording product turnover rates for your business.
Total revenue earned
It is important for businesses to know how much they were able to earn within a given period. They can achieve this objective by keeping a record of the products they have sold and the amount they have earned against these sales. With the correct figures in hand, businesses can make decisions on their future sales strategies and investments. Hiring bookkeeping and accounting firms in Dubai will enable you to keep the books updated and correct. From these books and records, you can track your business’s total sales and earned revenues.
Profit loss statements
Every business needs to develop these financial reports and statements. Having a profit and loss statement enables businesses to identify their net income. These businesses will find help in many aspects, and one of the most important is in decision making. The income of any business is also important as it identifies the tax amount a business will be paying. The right profit and loss accounts help businesses make the right decisions and claim tax refunds.
Inventory check
Product turnover helps businesses and manufacturers to keep a check on their inventories. The product turnover is calculated by the total number of products sold divided by the total products in the inventory. Knowing the number of products sold and the remaining ones help businesses keep their inventory levels always enough to serve their customers. Checking the inventories daily helps businesses have enough products in hand to serve their customer needs.
Fraud prevention
When you know the right figures and amounts of total products sold divided by the total number of products in the inventory, you can minimize fraud. Any missing products or products will be easier to identify if you keep tracking your inventories and the sold products. Any mistake in enlisting the figures will lead to wrong decisions, so it is always preferable to have expert bookkeepers and accountants for this job.
Market demand
When keeping your books and recording the items sold in a day or a given period, you will easily figure out which products you sold the most. The products with higher turnover rates point towards the demand for these products in the market. If any of your products have a higher turnover ratio, you can focus more on that product and its improvement. The products with higher turnover rates are identified, but the ones with lower rates become clear. You can improve the quality and other aspects of such products for increased sales.
Business performance
If a business has higher product or inventory turnover rates, then it means a business is working fine, and your workers are performing satisfactory operations. The higher authorities and management need to know about the performance of their business. And one way to analyze the performance is by keeping proper records. Having account records and sales of a business daily provides a clear view of the business performance. Hire the bookkeeping and accounting firms in Dubai services to get accurate and correct financial reports and statements. This way, you will be able to make the right decisions for your business.
Keep an eye on your inventories and increase your turnover rates!
The inventory of any business keeps replacing and changing over a given period. It is important to track these replacements and changes. Replacements in the inventories show how well your business operates and gives you an overall estimation of your performance. To get accurate figures, you need to have experts not miss out on any opportunity to make the right choices.
