Inventory Valuation
Inventory Valuation helps you see the total value of your stock in Zoho ERP. It calculates the worth of items based on their cost and quantity, allowing you to track inventory value, monitor cost trends, and make smarter purchasing and financial decisions.
To view the Inventory Valuation Reports:
- Go to Reports on the left sidebar.
- Click Inventory Valuation under Reports Category.
Inventory Valuation Summary
This report summarises the stock on hand and the total asset value of your inventory items as of the current date. The calculation of Inventory Asset Value depends on the costing method selected for the item at the time of creation:
FIFO (First In, First Out): This is calculated based on the earliest purchase cost for available stock.
- Inventory Asset Value = Stock on Hand x Cost Price Per Unit.
Weighted Average Costing (WAC): This is calculated as the total cost of stock divided by the total quantity available.
- Inventory Asset Value = Stock on Hand x Average Cost Price Per Unit.
FIFO Cost Lot Tracking
Zoho ERP employs the First In First Out principle to track goods. In this report, you can view a detailed account of all the items going out against the items coming in as per the FIFO rule during a given period. You can run this report for all your items or a specific item of your choice.
Scenario: Consider an item A whose opening stock and opening stock value is 20 units at 10 USD/unit. You purchase an additional 10 units at 12 USD/unit against Bill #1 which makes it a total of 30 units available for sale in your inventory. Now you receive an order requesting 25 units of item A. As soon as you send an invoice for these 25 pieces of item A, the system matches the first 20 units against the opening stock of 20 and calculates its value as 2010 USD = 200 USD. The remaining 5 units are matched against the 10 units from Bill #1 and its value is 512 USD = 60 USD, leaving you with five other units of item A from Bill #1 worth 12 USD/unit.
ABC Classification
The ABC Classification report is an inventory categorization report that groups your items into three classes, namely A, B, and C, based on the revenue they generate and its impact on your business for a specific period.
| Class | Description |
|---|---|
| A | This class consists of the most revenue-generating items. These items contribute heavily to the overall profit of your company and are critical to your business. They require close monitoring to ensure they are never out of stock. |
| B | This class includes moderately selling items. They are not as critical as Class A but have more impact than Class C. Based on changing demand, these items may move into Class A or Class C. |
| C | This class consists of low-performing items that contribute the least to revenue. They are often surplus, occupy inventory space, and incur holding costs, so replenishment is usually unnecessary unless stock runs out. |
Landed Cost Summary
This report depicts the summary of the landed cost you’ve incurred from your purchases with each vendor and the amount allocated for the items in the bills. Learn more about tracking landed costs on items in Zoho ERP.
Inventory Turnover By Amount
Inventory Turnover By Amount Report analyzes how efficiently your inventory value is converted into sales. It uses the opening and closing balance to calculate the average inventory value, compares it with the cost of goods sold to derive the turnover ratio, and computes the average turnover days to show how long inventory value remains unsold. This report helps identify slow- and fast-moving items in terms of cost, improve cash flow, and make informed purchasing and pricing decisions.