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QuickBooks Inventory

Inventory metric refers to the amount of stock or products a business has on hand at any given time. It helps to track inventory levels and measure inventory turnover to optimize cash flow and profitability.

With Databox you can track all your metrics from various data sources in one place.

Inventory $160,000 Start tracking this metric
  • About
  • Tech details
  • Notes

What Is Inventory

Inventory refers to the goods and materials that a business holds for the purpose of resale or production.

The specific items can include a variety of products, raw materials, work-in-progress goods, and finished goods that are either ready for sale or in the process of being manufactured.

The management of inventory is a critical aspect of any business, as it directly impacts the company’s financial health and operational efficiency. Proper inventory management ensures that the right quantity of items is available at the right time to meet customer demand, while minimizing carrying costs and the risk of stockouts.

To ensure efficient inventory management, businesses often use various inventory management techniques, including just-in-time (JIT) inventory, economic order quantity (EOQ), and ABC analysis, among others.

How to Calculate Inventory

To calculate inventory, we need to consider the value of all the goods and materials that the business holds at a specific point in time.

The formula to calculate inventory is straightforward:

Inventory = Beginning Inventory + Purchases – Cost of Goods Sold (COGS) + Ending Inventory

Say a retail store wants to calculate its inventory for the year 2023 and saw these figures:

  • Beginning Inventory (January 1, 2023): $50,000
  • Purchases during 2023: $150,000
  • Cost of Goods Sold (COGS) during 2023: $120,000
  • Ending Inventory (December 31, 2023): $80,000

Now, let’s put the formula above into action:

Inventory = $50,000 (Beginning Inventory) + $150,000 (Purchases) – $120,000 (COGS) + $80,000 (Ending Inventory) Inventory = $160,000

In this example, the inventory for the retail store at the end of 2023 would be $160,000.

How to Improve Inventory Management

To optimize resources, minimize costs, and meet customer demands efficiently, businesses need effective inventory management.

With a well-managed inventory, you make sure that the right products are available at the right time, which significantly reduces the risk of stockouts or overstocking.

Depending on your specific business model, some inventory management strategies will be more efficient than others.

That said, we compiled a few approaches that could be useful for any business, regardless of its type or industry.

  • Give cross-docking a chance: Cross-docking is a logistics technique that involves unloading incoming inventory from suppliers and immediately loading it onto outbound trucks for distribution to customers. This way, businesses can basically bypass the need for storage on certain goods and reduce holding costs and transit times, which leads to faster order fulfilment.
  • Utilize Vendor Managed Inventory (VMI): VMI is a collaborative approach where suppliers manage their customers’ inventory levels based on real-time data. Suppliers take responsibility for replenishing stock at the customer’s location, which means it’s easier to maintain optimal inventory levels. It also helps with better demand forecasting and inventory visibility.
  • Take advantage of 3D printing for spare parts: For industries with expensive or hard-to-find spare parts, adopting 3D printing technology can make enormous difference in inventory management. Instead of maintaining a large stock of spare parts, you can 3D print them on demand, saving storage space and ensuring the necessary parts are available when needed.

More resources to help you improve:

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How to track Inventory in Databox?

Databox is a business analytics software that allows you to track and visualize your most important metrics from any data source in one centralized platform.

To track Inventory using Databox, follow these steps:

  1. 1
    Connect QuickBooks that contains the metric you want to track
  2. 2
    Select the metric you want to track from the list of available metrics
  3. 3
    Drag and drop the selected metric onto your dashboard
  4. 4
    Watch your dashboard populate in seconds
  5. 5
    Put Inventory on the Performance screen
  6. 6
    Get Inventory performance daily with Scorecards or as a weekly digest
  7. 7
    Set Goals to track and improve performance of Inventory
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Basics

  • Description
    Inventory metric refers to the amount of stock or products a business has on hand at any given time. It helps to track inventory levels and measure inventory turnover to optimize cash flow and profitability.
  • Category
    Accounting
  • Subcategory
    Inventory
  • Date Added
    2016-05-20
  • Default Format
    PrefixCurrency
  • Cumulative Support
    No
  • Units
    Yes
  • Granularities
    daily, weekly, monthly, yearly, quarterly, allTime
  • Favorable Trend
    increasing
  • Historical Data
    No
  • Changing historical data
    No
  • Forecast Support
    Yes
  • Benchmark Support
    Yes
  • Media Support
    No
  • Dimension
    N/A
  • Metric Type
    current Learn more
  • API Endpoint
    https://quickbooks.api.intuit.com/v3/company/{realmId}/reports/VendorExpenses

  • Data discrepancy for QuickBooks ‘Inventory’ metric in Databox

    Databox pulls the value for the ‘Inventory’ metric from ‘Expenses by Vendor Summary Report’ in QuickBooks.
    In case you compare the value for the ‘Inventory’ metric with the value from the ‘Balance Sheet Report’ in QuickBooks and notice discrepancies, you should navigate to the ‘Expenses by Vendor Summary Report’ in QuickBooks instead and use the values there for comparison.

Questions? We've got answers.

  • How to Choose the Right Inventory KPIs?

    Choosing which inventory KPIs you’re going to prioritize should be primarily based on your specific strategic goals.

    Make a list of 5-8 KPIs for the beginning, and then test and refine based on your needs and operational efficiency. Tracking more KPIs might seem like a good idea, but it can actually overwhelm you and be counterproductive.

    When choosing the right inventory KPIs to track, it’s also a good idea to have a chat with your warehouse manager and inventory staff to get their opinion on the most important areas. 

     

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