Ways to Analyze Inventory on the Balance Sheet
The balance sheet of a company shows how the business operates within a given accounting period. Also known as a statement of financial position, the financial performance of the company is determined by monitoring the elements of the balance sheet, namely, assets, liabilities and equity. One of the assets that needs to be managed is inventory.
In order to calculate inventory with accuracy, a business need to follow an inventory management system, like an inventory control guide, in order to gain efficiency in inventory operations and accuracy with the financial information. Take a look at the ways on how to analyze inventory on the balance sheet with the help of the balance sheet templates.
Analyzing Inventory on the Balance Sheet
While looking into the sample inventory on the inventory templates of this website, learn how to analyze inventory on the balance sheet by following the factors to be considered in order to understand the inventory on the balance sheet:
- Using ratios related to inventory. There are financial ratios regarding inventory and income statement elements like sales and cost of goods sold that determine how inventory is affecting the overall financial performance of the business. Here is a list of the ratios:
- Days Inventory Outstanding – This defines the number of days inventory is stored before selling it.
- Inventory Turnover – This determines how fast the inventory is sold to consumers.
- Inventory to Sales Ratio – This ratio provides an overview of how investment in inventory is growing as compared to sales.
- Reading the notes to financial statements. Another essential way to analyze inventory is using supplemental notes to financial contain the valuation methods and inventory system the company is following to manage their inventory.
- Identifying the risks of too much inventory. The amount of inventory on the balance sheet will determine how well the company is managing inventory. If there is too much inventory, the following risks that can harm the financial performance of the business:
- Risk of inventory becoming obsolete
- Risk of spoilage in inventory
- Risk of shrinkage in inventory
Benefits of Inventory Analysis
Analyzing inventory, even those based on certain inventory template samples, on the balance sheet is an essential business practice due to the following benefits:
- To improve inventory policies for better inventory control. Controlling of inventory is one of the inventory management tools a business follows. With the use of inventory analysis as seen on inventory templates in PDF, the stakeholders involved would know what policies to focus and to work on to achieve a good inventory amount on the balance sheet.
- To aid in management’s decisions toward business assets. The strategies on handling inventory instructed by management are based on the generated inventory analysis for the financial statements of the company like the income statement and the balance sheet.
- To achieve the return on investment required for the business. Most printable inventory templates highlight management tactics on how to gain the return of investment they want. By analyzing the inventory on the balance sheet, they would know how to deal with inventory to attain the return on investment needed to continue the business.
Knowing the ways on how to analyze inventory on the balance sheet will help us in understanding why inventory is one of the vital assets of a business particularly for business industries dealing with the manufacturing and the selling of goods.
More in Inventory Templates
7+ Marketing Inventory Templates in PDF | 7+ Medical Supply Inventory List Templates |
11+ Workshop Inventory Templates in PDF | DOC | 11+ Real Estate Inventory Templates in Google Docs | Google Sheets | Word | Pages | XLS | Numbers | PDF |
12+ Supply Inventory Templates in Google Docs | Google Sheets | XLS | Word | Pages | Numbers | PDF | 17+ Best Equipment Inventory Templates in Google Docs | Google Sheets | Word | XLS | Pages | Numbers | PDF |
15+ Best Stock Inventory Templates in Google Docs | Google Sheets | Word | XLS | Pages | Numbers | PDF | 11+ Data Inventory Templates in Google docs | Google Sheets | XLS | Word | Pages | Numbers | PDF |
8+ Employee Inventory Templates in XLS | Word | Numbers | Pages | PDF | 18+ Best Inventory Report Templates in Google Docs | Google Sheet | XLS | Word | Pages | Numbers |
12+ Best Restaurant Inventory Templates in PDF | Word | Pages | XLS| Numbers | Google Docs | Google Sheets | 10+ Software Inventory Templates in XLS | Numbers | Pages | Word | PDF |
11+ Business Inventory Templates in Google Docs | Google Sheets | Word | Pages | XLS| Numbers | PDF | How to Create a Home Inventory [15+ Templates to Download] |
20+ Inventory Checklist Templates in Google Docs | Word | Pages | XLS | How to Create an Inventory List [19+ Templates to Download] |
11+ Small Business Inventory Templates in Google docs | Google Sheets | XLS | Word | Pages | Numbers | PDF | 11+ Inventory Spreadsheet Templates |
10+ Inventory Templates in Apple Pages | 10+ Inventory Template in Apple Numbers |
10+ Inventory Templates in Google Docs | 10+ Inventory Templates in Word |
How to Make/Create an Inventory in Google Sheets [Templates + Examples] 2023 | 10+ Inventory Templates in PDF |
10+ Inventory Templates in Excel | 9+ Simple Inventory Templates |
12 Inventory Control Templates - PDF | 22 Inventory Templates in Excel |
How to Conduct A Physical Inventory | Is It Time to Track Inventory? |
7+ Product Inventory Templates - Sample, Example | How Business Inventory is a Valuable Business Asset |
How Inventory Investment Affects Profits and Cash Flow | 4+ Daycare Inventory Templates - Sample, Example |
Ways to Analyze Inventory on the Balance Sheet | Define POS System for Inventory Management? |
Ways to Cycle Count Your Inventory | Why Do Businesses Need Inventory? |
What Is Inventory Financing and How Does It Work? | What to Choose - a Periodic or Perpetual Inventory System |
46+ Best Inventory Templates | 17+ Inventory Templates in DOC |
7+ Storage Inventory Templates - Sample, Example | 32+ Inventory Templates in PDF |
31+ Printable Inventory Templates | 41+ Free Inventory Templates |
6+ Sample Stock Inventory | 9+ IT Inventory Templates |
7+ Application Inventory Templates - Sample, Example | 22+ Inventory Templates |
6+ Donation Inventory Templates - Word, PDF | 7+ Sample Church Inventory |
7+ IT Inventory Templates - Sample, Example | 7+ Church Inventory Templates - Word, PDF |
A Comprehensive Guide for Small Business Inventory Control | Components and Considerations of Inventory Carrying Costs |
What Is Inventory Turnover? | How Inventory Turnover and Inventory Turns Are Calculated |
5+ Donation Inventory Templates - Sample, Example | 6+ Store Inventory Templates |
4+ Gift Inventory Templates - Word, PDF | 7+ Sample Data Inventory |
6+ Gift Inventory Templates - Sample, Example | 10+ Daily Inventory Templates - Sample, Example |
9+ Product Inventory Templates - Word, PDF | 5+ Data Inventory Templates |
6+ Business Inventory Templates - Samples, Examples | 17+ Daily Inventory Templates - Word, PDF |
8+ Landlord Inventory Templates - Sample, Example | 7+ Office Inventory Templates |
34+ Sample Inventory | 6+ Office Inventory Templates -Word, PDF |
5+ Grocery Inventory Templates - Samples, Examples | 7+ School Inventory Templates - Sample, Example |
5+ Store Inventory Templates - Word, PDF | 6+ Book Inventory Templates - Sample, Example |
6+ Storage Inventory Templates - Word, PDF | 8+ School Inventory Templates - Word, PDF |
9+ Excel Inventory Template | 4 Inventory Management Templates |
12+ Inventory Spreadsheet Examples | 7+ Application Inventory Templates |
FREE 17+ Inventory Templates in PDF | 17+ Inventory Templates |
7+ Perpetual Inventory Templates | 541+ Inventory Templates - Free Sample, Example, Format Download! |
13+ Moving Inventory Templates – Free Sample, Example, Format Download | 16+ Software Inventory Templates – Free Sample, Example, Format Download |
13+ Inventory Database Templates | 15+ Bar Inventory Templates – Free Sample, Example, Format Download |
15+ Tenancy Inventory Templates – Free Sample, Example, Format Download | 21+ Inventory Report Templates – Free Sample, Example, Format Download |
13+ Rental Inventory Templates – Free Sample, Example, Format Download | 13+ Property Inventory Templates – Free Sample, Example, Format Download |
16+ Retail Inventory Templates – Free Sample, Example, Format Download | 21+ Warehouse Inventory Templates – Sample, Example, Format Download |
11+ Inventory Worksheet Templates – Free Sample, Example, Format Download | 14+ Server Inventory Templates – Free Sample, Example, Format Download |
13+ Bar Inventory Template – Word, Excel, Numbers, Apple Pages | 19+ Tool Inventory Templates – Free Sample, Example, Format Download |