Retail Inventory :: essays research papers fc

Retail Inventory-Level Planning consists of retail inventory method ( mouth) which is an accounting procedure whose objectives are to maintain a perpetual. It everywherely can book inventory in retail dollars amounts and to maintain records that make it possible to determine the cost look on of the inventory at any meter without taking a physical inventory. Also known as book inventory system or perpetual book inventory. Retailers also have some other important choice to make the stock to sales ratio. The stock to sales ratio is derived directly from the planned inventory to determine monthly additions to stock in the merchandise budget plan. Retailers generally think of their inventory at retail price levels rather than at cost. Retailers workout their initial markups, additional markups, and markdowns, and so forrader as percentages of retail. When retailers compare their prices to competitors, they use retail prices. The problem is that when retailers to design their finan cial plans, evaluate performance, and prepare financial statements, they need to know the cost value of their inventory. Retailers use physical inventories. This process is time consuming and costly. Retailers take physical inventories once or twice a year. Many retailers use point of sale terminals that advance track of every item sold its original cost, and its final selling price. The rest of the retailers face a problem of not knowing the cost value of their inventory at one time. These retailers with either computerized or manual systems can use retail inventory method. Their are five advantages for using RIM over a system of inventory at cost. The does not have to cost each time. When retailers have many SKUs, keeping track of each item becomes embarrassing and expensive. It is easier to determine the value of inventory with the retail prices marked on the merchandise than unmarked or at coded cost prices. The second advantage for using RIM is that it follows the accepted ac counting principal of valuing assets at cost or market value, which is lower. This system lowers the value of inventory when markdowns are taken but does not ply inventorys value increase with additional markups. When using RIM, the amounts and percentages of initial markups, markdowns, and shrinkage can be identified. This information can then be compared with historic records or industry norms.RIM is useful for determining shrinkage. The difference between the book inventory and the physical inventory can be attributed to shrinkage.