# Performance Indicators

jessbill3
Posts:

**17**Registered
Scenario 1;

Sales Volume (units) 120,000

Revenue £1,680,000

Gross Profit £600,000

Profit from operations £275,000

Net Assets £2,298,400

Inventory £147,950

Scenario 2;

Sales Volume (units) 150,000

Revenue £1,800,000

Gross Profit £450,000

Profit from operations £200,000

Net Assets £2,100,340

Inventory £167,500

Please can somebody provide the formula and calculation to the following for each scenario;

Inventory holding period in days?

Full Production cost per unit?

Sales Volume (units) 120,000

Revenue £1,680,000

Gross Profit £600,000

Profit from operations £275,000

Net Assets £2,298,400

Inventory £147,950

Scenario 2;

Sales Volume (units) 150,000

Revenue £1,800,000

Gross Profit £450,000

Profit from operations £200,000

Net Assets £2,100,340

Inventory £167,500

Please can somebody provide the formula and calculation to the following for each scenario;

Inventory holding period in days?

Full Production cost per unit?

## Comments

2,034Registered, ModeratorFormulaClosing Inventory Valuex 365Cost of Sales Value

Scenario 1£147,950x 365(£1,680,000 - £600,000)

Scenario 2£167,500x 365(£1,800,000 - £450,000)

[email protected]

www.sandyhood.com

2,034Registered, ModeratorFormulaRevenue - Profit from OperationsSales Volume

Scenario 1£1,680,000 - £275,000120,000 units

Scenario 2£1,800,000 - £200,000150,000 units

[email protected]

www.sandyhood.com

2,034Registered, ModeratorWe like to know what the inventory is worth in terms of the cost of sales. In scenario 1 we have £147,950 of inventory (this would be finished goods)

As the total cost of the inventory sold (cost of sales) was £1,080,00 over a year this means our inventory is equivalent to 13.7% of the cost of sales. By multiplying this by 365 (days in a year) we can see that are holding inventory worth as much as 50 days sales.

We know that profit from operations is the value left after all the operating costs have been deducted from the revenue. So we can reverse the calculation and find operating costs by deducting the profit from operations from the revenue.

The cost per unit is total operating costs divided by the number of units produced.

In the case of Scenario 1 £1,405,000/120,000 units = £11.71 to the nearest whole pence

I hope this has been useful

If you would like to show your appreciation in the form of a donation to charity, please consider this donation page on the Cancer Research UK website. The money raised so far is being used to try to find cures for cancer. Whenever I see researchers from the specialist research unit in Southampton they tell me of new treatments and other breakthroughs they have achieved. The donations really help.

http://relay.cancerresearchuk.org/site/TR/RelayForLife/General?team_id=6827&pg=team&fr_id=1481

[email protected]

www.sandyhood.com

[email protected]

www.sandyhood.com