The Research On Inventory Management Of A Company

Currently, enterprises hold inventories for various reasons. As a result, the proportions ofinventory in the total assets of companies are very large. It’s another important factor thataffects the profits of enterprises. Rational management of inventory and the proper reductionof inventory could bring significant economic profits to the company.Found in this article from the financial statements of A company, A company set up twoyears at the high speed development stage, in2013, total assets at the rate of220.55%year-on-year growth, liabilities with year-on-year growth of221.38%, the owners’ equity of Acompany for two years in the negative. Inventory account for30.90%of the30.90%of totalassets, current assets, become the most important assets of A company, the author thinks thatstrengthening the company’s inventory management can reduce inventory holding cost,ordering cost, procurement cost and shortage cost, so that the company’s overall operatingcosts down, in order to improve the state of loss.The inventory turnover calculated on the basis of income mainly analyzes theprofitability of enterprises. Generally speaking, when the inventory turnover is higher, theliquidity of it is stronger, the cash conversion circle is shorter, and the cost for the occupationof asset is lower. This article analyzes the inventory turnover of companies on the basis ofincome in order to figure out the level of the inventory management. The problemsconcerning the unreasonable occupation of assets are figure out, which improves the profits ofthe company to some extent.This article reviewed the relevant theoretical knowledge before the theories are combinedwith practice. Based on the review of the research results both at home and abroad, the currentsituation of the inventory management in Company A is discussed. Secondly, in-depthanalysis is conducted concerning the inventory management system of Company A. Theloopholes within the inventory management system are detected. In the end, solutions targetedat the problems are proposed through comparison with various methods. Improvementstrategies are provided for the ABC classification method. Hopefully, this research is of greatpractical significance.