Inventory Valuation Summary
On Hand
This is item quantity available on hand, which is the number of products you received (from purchase) minus the number of products you sold. On hand value provides a quick check whether you have enough stock to continue selling the item.
One often asked issue is a negative number in on hand value, which is possible because QuickBooks allows you to sell items that you don’t have, albeit warning you when you create an invoice. One way to solve this is purchase the out-of-stock item right away to refill your stock.
Avg Cost
The program calculates the average cost from the cost of every purchase of the items, divided by total number of items.
Asset Value
This is the number of stock on hand multiplied by the average cost and posted into your Inventory Asset account. Too high of asset value may reflect low turnover, while too low of asset value of your top selling products suggest you should purchase immediately.
% of Tot Asset
This column shows a percentage of the item’s asset value compared to the total asset value of all inventory. Depending whether an item is a top selling product or not, a higher value may reflect obsolete product.
Sales Price
This is the sale price of the item obtained from initial item setup. This value is useless if you often change the sale price to cater different customers, because the program does not check the sale price from the sales form.
Retail Value
This is the on hand value multiplied by the Sales Price. Because it relates to the sales price, this value is again meaningless if the sales price in the item setup is not constant.
% of Tot Retail
This is a percentage of the item’s retail value to the total retail value of all items. As different item sell at different selling price, this value is often not equal to the % Total Asset.
Inventory Valuation Detail Reports
This report details each transaction in every inventory item, both increases and decreases. Again, Asset Value of each item is the result of the on hand value multiplied by the average cost. To drill into transaction details, you can double click any transaction line.
If you need to adjust your inventory because of theft, damage, obsolete, or other reasons, clicks this Adjusting Inventory blog for detail explanation.