Viewing Inventory Valuations

Overview

This process document will cover how to view an item’s inventory valuation. We will also go into detail about what history contributes to these valuations, and the cost types that are available to view.

Valuation Types

Before we get started it is important to know what cost type valuations are available to view and how it is being configured with each inventory transaction. Here are the following costs that are being evaluated.

• FIFO - (First In First Out) cost is calculated by using

Purchase Order Received Value + Quantity on Hand Value.

In the scenario that you have insufficient purchase history for the number of items you have on hand and the current on-hand quantity to calculate a FIFO cost until you have sufficient history. FIFO stands for “First-In, First-Out” and is a method used to calculate the cost of goods sold (COGS) in accounting 1. The FIFO method assumes that the oldest products in a company’s inventory have been sold first, and the costs paid for those oldest products are the ones used in the calculation for inventory value.

2. To calculate COGS using the FIFO method, you need to determine the cost of your oldest inventory and multiply that cost by the amount of inventory sold. If the price paid for the inventory fluctuates during the specific time period you are calculating COGS for, that must be taken into account too.

• Example

• LIFO - LIFO (Last In First Out) cost is calculated the opposite as FIFO where by using the last cost of the recent purchase order received into inventory and then using that cost on the next action, ignoring any history.

  • Example

FIFO vs LIFO Layer is dependent on your accounting practices and what you decide for your business.

• Weighted Average - This cost looks at the average cost paid for items purchased and received over a period of time and calculates an average. Additionally, the average cost per item is requested when providing your initial inventory imports before go-live.

  • Example

• System Valuation (COST) - This cost is derived from your Ledger Cost Hierarchy and looks at your Pricing Profile Configuration. The hierarchy decides what cost and in what order is being calculated for specific action types, i.e. Stock Adjustments, Sales Orders, and or Purchase orders. This Valuation Cost will also be the same final value that is recorded in your Inventory Ledger.

• Standard - Represents a blanketed cost given to all distributors and would typically not be used when purchasing.

• Last Paid - The last paid cost represents the last item price you paid for an inventory item on a purchase order.

• UD Costs 1-5 - There are 5 User Defined Costs fields available in each pricing profile that can be used specifically for adding additional cost information. These can be leveraged in any number of scenarios for your business needs, however, they can not be used to calculate any system values.

Viewing Inventory Valuations & History

To view, an inventory item’s valuation go to Inventory > Inventory Manager > Item Manager

Next search for the inventory item within the item lookup.

While in the Item Manager you can view an at-glance Company Valuation for that item in the bottom left corner.

To view all cost methods from the item manager screen select the ‘Valuation’ tab.

On the left-hand side, you will see the cost valuations for each type.

Costs will be evaluated based on the transaction history described above. It displays the unit value as well as the total value based on your on-hand quantities. It will also display the Cost Used to configure these values based on what was configured within the Admin Settings under the Ledger Cost Hierarchy.

On the right-hand side on the valuation screen you will see the items history that contributes to the cost valuations.

By default, all history contributes to all. To drill down to a specific cost history choose from the dropdown menu.

When you select a new history to view the actions will show what has contributed to that cost valuation.

You can also include/exclude what actions to include or not to include in the valuation. For example you received a huge discount on this item for a one-time deal and you don’t want it to be included in the valuation. Just un- check the ‘Include’ box and Save & Reinitialize bottom right hand corner.

Reinitialize Valuation

In the scenario you want to reinitialize a single item select ‘Reinitialize Valuation’. Once you’ve selected this it will reinitialize this specific item, by clearing the history and begin from the start.

Next select the Actions you wish to include or not include. All changes will appear in yellow.

Next select ‘Save & Reinitialize’ and select ‘Yes’ to commit the changes. You will notice on the left-hand side that the valuations have been cleared. These valuations will restart as new actions are added to the history.