Looking at the flow of inventory through a company during a sales period can give you a direct view of the sales made during that period, both in value, and in the amount of units sold. The differences between beginning and ending inventory, as well as the inclusion of new inventory gives an exact picture of sales numbers for the period between, with only a bit of simple math required to bring that sales picture to light.
Use the end of year financial reports from the preceding period to determine the beginning inventory as a starting point. The beginning inventory is listed as the ending inventory in the financial reports with a valuation and perhaps even the number of items represented by that valuation. For example, if the financial reports list ending inventory 2009 as $50,000, then that would make the beginning inventory of 2010 $50,000 as well.
Check the production or purchasing records for the cost of goods added to the inventory during the sales period. Add these costs to the beginning inventory to determine the total inventory available for sale during the period. For a beginning inventory of $50,000, if the company manufactures an additional $250,000 in units, then the total inventory available for the sales period would be $300,000.
Check the present year’s financial statements for a listing of the ending inventory at the end of the sales period. Subtract the ending inventory from the total inventory available for sale amount to determine the value of the units sold from inventory during the sales period. For example, if the ending inventory is $50,000, and the total inventory available for sale, $300,000, then the inventory sold off during the period in question was $250,000.
Calculate the number of units sold by total valuation by dividing the amount of inventory sold off during the calculation period by the price to produce each unit individually. For a unit costing $100 to produce for example, $250,000 in sales would represent 2500 units in total sold during the sales period.
- Company annual reports
- Manufacturing or purchasing records
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