Average Inventory

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Dictionary Says

Definition of 'Average Inventory'

A calculation comparing the value or number of a particular good or set of goods during two or more specified time periods. Average inventory is the median value of an inventory throughout a certain time period. A basic calculation for average inventory would be:

(Current Inventory + Previous Inventory) / 2

In this example, the current inventory, $10,000, is added to a previous inventory - for example, the inventory on the same day of the previous year, such as $8,000 - and divided by the two balance points, for an average of $9,000 (($10,000 + $8,000) / 2 = $9,000).

 
Investopedia Says

Investopedia explains 'Average Inventory'

Because two points do not always accurately represent changes in inventory, average inventory is frequently calculated by using 13 points. For instance, you could use the end of each month over the course of one fiscal year, including the base month. These points are then added together and divided by 13 (the number of points) to determine the average inventory. Another method is to calculate each month's average inventory, adding these figures and dividing by the number of points.
Search results for

'Average Inventory'

  • CFA Level 1 Study Guide - Assets - Inventory Analysis ...

    http://www.investopedia.com/exam-guide/cfa-level-1/assets/inventory-analysis.asp
    ... 3.13 Modifying Output; 3.14 Marginal and Average Total Cost Curves; 3.15 ... for Credit
    Transactions; 8.4 Basics of Inventories; 8.5 Effects of Misstated Inventory; ...

  • Operating Performance Ratios: Operating Cycle | Investopedia

    http://www.investopedia.com/university/ratios/operating-performance/ratio3.asp
    ... Dividing the average inventory figure by the cost of sales per day figure. ... (2)
    average inventory 2005, 536.0 + 583.7 = 1,119.7 ÷ 2 = 559.9. ...

  • Measuring Company Efficiency

    http://www.investopedia.com/articles/stocks/05/04405.asp
    ... In fiscal 2003, inventory sat on its shelves for an average 45 days. ... Inventory Days =
    365 Days / (Average Cost of Goods Sold/Average Inventory). ...

  • Liquidity Measurement Ratios: Cash Conversion Cycle | Investopedia

    http://www.investopedia.com/university/ratios/liquidity-measurement/ratio4.asp
    ... Dividing the average inventory figure by the cost of sales per day figure. ... (2)
    average inventory 2005, 536.0 + 583.7 = 1,119.7 ÷ 2 = 559.9. ...

  • Understanding The Cash Conversion Cycle

    http://www.investopedia.com/articles/06/cashconversioncycle.asp
    ... DIO = Average inventory/COGS per day Average Inventory = (beginning inventory +
    ending inventory)/2. ... Average Inventory, ( 1314.0 + 1274.6 ) / 2 = 1294.3. ...

  • Inventory Valuation For Investors: FIFO And LIFO

    http://www.investopedia.com/articles/02/060502.asp
    ... Average Cost Ending Inventory =, [(1,000 x 8) + (1,000 x 10) + (1,000 x 12) + (1,000
    x 15)]/4000 units = $11.25 per unit 1,000 units X $11.25 each = $11,250. ...

  • CFA Level 1 Study Guide - Assets - Effects of Inventory Accounting ...

    http://www.investopedia.com/exam-guide/cfa-level-1/assets/inventory-accounting.asp
    ... 3.13 Modifying Output; 3.14 Marginal and Average Total Cost Curves; 3.15 ... for Credit
    Transactions; 8.4 Basics of Inventories; 8.5 Effects of Misstated Inventory; ...

  • What's the difference between weighted average accounting and FIFO ...

    http://www.investopedia.com/ask/answers/09/weighted-average-fifo-lilo-accounting.asp
    ... In other words, weighted average uses the formula: Total cost of items in inventory
    available for sale divided by total number of units available for sale. ...

  • Company Survival: Cash Conversion Cycle Is Key

    http://www.investopedia.com/articles/fundamental/092402.asp
    ... Cash Conversion Cycle (or Net Operating Cycle) = Average Inventory Collection Period +
    Average Receivables Processing Period – Average Payables Period. ...

  • Dynamic Current Ratio: What It Is And How To Use It

    http://www.investopedia.com/articles/02/090302.asp
    ... Inventory turnover ratio =, COGS / Average Inventory Accounts Receivable Turnover
    Ratio = Net Credit Sales / Average Accounts Receivable. ...

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