To calculate physical inventory, you need a physical inventory count presenting each inventory unit’s volume, weight, quantity, and other measurements. Then, you can aggregate these figures to ensure that all your assets and receivables are in balance. In addition, one efficiency metric to measure inventory efficiency is the Inventory Turnover Ratio:
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
In which, the average rate of bestsellers is usually around 16.5 times per year.
As you might be interested: What is a good inventory turnover ratio for retail?
What does physical inventory consist of?
Physical inventory consists of all products in your warehouse or retail store. It includes raw materials, in-process, and finished goods. These inventory counting categories combine goods you use to produce inventory and which items are ready for sale.
How often do you do a physical stock count?