Retail Inventory :: essays research papers fc

Retail Inventory-Level Planning consists of retail entry method (lip) which is an accounting procedure whose objectives ar to maintain a perpetual. It alike great deal book entry in retail dollars amounts and to maintain records that retain it possible to charm the cost comfort of the inventory at both time without taking a physical inventory. Also known as book inventory system or perpetual book inventory. Retailers withal sacrifice another important choice to make the stock to gross revenue 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 ideate of their inventory at retail price levels rather than at cost. Retailers usage their initial markups, additional markups, and markdowns, and so forth as percentages of retail. When retailers compare their prices to competitors, they affair retail prices. The problem is that when retailers to design their f iscal plans, evaluate performance, and prepare financial statements, they need to know the cost appraise of their inventory. Retailers use physical inventories. This surgical operation is time consuming and costly. Retailers take physical inventories once or double a year. Many retailers use point of sale terminals that keep comprehend of every item sold its original cost, and its final selling price. The substitute 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 from each one time. When retailers have many SKUs, keeping track of each item becomes difficult and expensive. It is easier to determine the value of inventory with the retail prices mark on the merchandise than unmarked or at coded cost prices. The countenance advantage for using RIM is that it follows the accepted accounting 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 allow 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 historical records or patience norms.RIM is useful for determining shrinkage. The difference between the book inventory and the physical inventory can be attributed to shrinkage.