Corporate Finance Learning®
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Inventory level planning.Credits to Bojan Radojicic, follow him for more finance insights!~~~~~~~~~𝘏𝘦𝘳𝘦'𝘴 𝘵𝘩𝘦 𝘰𝘳𝘪𝘨𝘪𝘯𝘢𝘭 𝘱𝘰𝘴𝘵:Learn how to create an inventory forecast.𝗧𝗵𝗶𝘀 𝗶𝘀 a 𝘀𝘁𝗲𝗽-by-𝘀𝘁𝗲𝗽 𝗴𝘂𝗶𝗱𝗲:→ Split inventories into 3 levels: Raw materials, WIP and Finished Goods→ Cost of material is associated with Raw material planning, COGS is associated with WIP and FG planning→ Input historical figures of cost of material and COGS and inventories→ Calculate days on hand for each type of inventory→ Input forecast of cost for material and COGS→ Make the best estimate for each type of DOHs for the next period→ Calculate inventories level based on formulas~~~~~~~~~𝗗𝗼𝘄𝗻𝗹𝗼𝗮𝗱 𝗹𝗶𝗻𝗸: https://lnkd.in/dkigcs8R~~~~~~~~~📌 If you are readyto transform your career with finance modeling skills start with these 35 lessons and 50+ modeling spreadsheets: https://lnkd.in/dV_Bvq6mHappy practicing!~~~~~~~~~
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Dj Kim
Sr. Controller & Regional Finance Lead, CMA
3w
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Very good, but I think we should go with CGM to calculate DOH WIP instead of CGS
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Dr. Pranay Singh
Insurance Consultant at Bajaj Allianz Life |Aspiring Dentist and Tactical CIA Field Agent| Cybersecurity Learner
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Very useful important and analytical content 👌 👏 👍
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Ayub khan
Deputy Manager Accounts & Finance
3w
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I'll keep this in mind
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Kantharaja Krishnappa
Senior Accountant with 12+ years of experience in the field of accounting and finance, successfully managing financial operations, ensuring compliance with accounting standards
3w
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Very useful
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Activity-Based Costing (ABC) is a methodology that allows you to visualize how each activity in the organization contributes to the generation of costs and revenues. Therefore, despite being very versatile, it is especially indicated for businesses that have a complex structure:- Companies that produce/offer a wide variety of products or services;- Companies present in different markets;- Companies with multiple activities that consume resources in varying amounts;- Companies that offer customization of products or services;- Companies with production processes in numerous steps;- Companies that need to gain control over indirect costs.Not sure if ABC costing is right for your business? Contact our specialists for more information.https://lnkd.in/gWMPxuEf
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Pierre Abiwahab
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"Time for a crash course in business finances! 📊💰 COG vs. COGS: Not just acronyms, but key indicators of your company's financial health. 🔄COG (Cost of Goods) covers all production-related expenses, while COGS (Cost of Goods Sold) zeroes in on costs directly linked to goods sold during a specific period. 🛠️🔍COG provides a broader view of the overall expenses tied to bringing a product or service to market, but it doesn't specifically focus on goods that have been sold during a particular period. Understanding COG is fundamental for evaluating the total production costs in a business. 💼📊Now, let's find COGS. It's the sum of direct costs like raw materials, labor, and manufacturing overhead. Subtract the closing inventory from the sum of opening inventory and purchases during the period. Voila! You've got your COGS. 🧮📈Stocktaking offers several benefits, particularly when calculating COGS (Cost of Goods Sold):Accurate Financial Reporting: Regular stocktaking ensures that your inventory records align with physical stock, leading to more accurate financial statements. This accuracy is crucial for precise COGS calculations.Prevention of Overstocking/Understocking: By keeping track of your stock levels, you can avoid overstocking (reducing carrying costs) or understocking (preventing missed sales opportunities). This optimization directly influences COGS by managing the balance between production costs and goods sold.Identification of Shrinkage or Losses: Stocktaking helps identify discrepancies between recorded and actual stock levels. Detecting and addressing shrinkage or losses promptly is vital for maintaining accurate COGS figures and overall financial health.Cost Control: Understanding the actual quantity of goods on hand allows for better cost control. This directly impacts COGS by helping businesses manage expenses related to production, ensuring a more accurate reflection of the costs involved in goods sold.Strategic Decision-Making: Accurate COGS information resulting from effective stocktaking enables informed decision-making. This is essential for setting pricing strategies, optimizing production processes, and overall business planning.In essence, stocktaking is a critical practice that directly influences the accuracy of COGS calculations, providing a solid foundation for financial management and strategic decision-making in any business. 📊💡 #Stocktaking #COGSBenefits #BusinessEfficiencyUnderstanding COGS helps gauge profitability and refine pricing strategies. Mastering these basics is a game-changer for financial clarity! 💡💼 #BusinessFinance101 #COGvsCOGS #FinancialInsight"
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Gary DeHart
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Agnes Nkundabagenzi, CMA, CPA
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