cancel
Showing results for 
Search instead for 
Did you mean: 

Logic of MC44

former_member321326
Participant
0 Kudos

Hi experts.

I have a problem with the logic of MC44.

According to other posts, inventory turnover is supposed to be calculated with the logic below.

"COGS / average stock" (based on quantity, average stock is calculated by toal of the stock of each day of period / the number of the days of period)

However, when I try to verify the validity , it seems like the quantity of stock transfer is included in the numerator of the logic.

So I think the formula of MC44 above must not be perfectly precise.

[Example]

Period of inventory turnover:2016/10/01~2016/12/5 (66days)

11/5 received:5

12/5 sold:2 stock transfer:1

When the numerator of the inventory turnover formula doesn't contain the qty of stock transfer, it is to be calculated as below

sold 2 / average stock (2.318)

≒0.86

average stock = 11/1~11/4(4days): stock 0

11/5~12/4(30days):stock 5

12/5 (1day) :stock 3

⇒(4*0+30*5+1*3)/ 66 days

≒2.318

However when I run MC44, the consequence is 1.29

Probably the logic may be below

sold 2 + transfer1 / average stock(2.318)

≒1.29

Is my recognition right ?

I would like to know the correct logic because I think the numerator of the inventory turnover formula must be generally COGS.

Best regards.

Takeshi

former_member321326
Participant
0 Kudos

Hi, Jürgen

Thank you for teaching me and retagging to correct one.

I'll be more careful.

View Entire Topic
former_member321326
Participant
0 Kudos

Hi, Jürgen.

Thank you for your reply.

I finally understand the formula.

As you speculated, I searched for inventory turnover formula on the web.

However it appeared that none of that match the result of running MC44.

Now I know the inventory turnover calculated in MC44 is different from the one of those things.

I deeply appreciate your help.

Best regards.

Takeshi

former_member195079
Participant
0 Kudos

Hello Takeshi, ,

Could you share the formula used by MC44?

Thank you for you help.

Jose