26-05-2012, 10:16 AM
ANALYSIS OF WORKING CAPITAL MANAGEMENT
1)ANALYSIS OF INVENTORY MANAGEMENT.
Inventory refers to the stocks that a business firm keeps to meet its future requirements of production and sales. In short inventory means stocks.
Objectives of Inventory Management.
o To ensure adequate maintenance of supplies of raw materials, stores and spares and finished goods so as to maintain the production levels and to meet the varying needs of the customers.
o To keep the investment in inventory as low as possible.
o To prevent / minimize loss due to obsolescence, determination, theft.
INVENTORY TURN OVER RATIO:
Inventory turnover ratio indicates the number of times the average stock is turned during a year. It is calculated by dividing the sales by closing inventory.
Inventory Turnover Ratio = Sales
Average Inventory