USE OF INVENTORY CONTROL SYSTEM.

FIRST, WHAT IS INVENTORY CONTROL.

It means keeping track of your stock to make sure you have
the right amount of each product. With good inventory
control, you can keep track of your purchase orders and keep
your supply chain running smoothly. You can set up systems
to help you make predictions and set reorder points, too.
The general goal is to make as much money as possible
while keeping as little stock as possible in your warehouse.
Your business must do this without hurting the satisfaction
of its customers. Inventory control can be done by hand, but
there are also automated systems that can manage your stock
levels and help you avoid costly human error.
We need to remember that Inventory Control and Inventory
Management are not the same thing. Inventory control works
with the stock that is already in the warehouse of a
distributor.
It means you have to know what products you have in stock
and where they are in your warehouse. It makes sure that the
inventory stays in good shape and is set up in a way that
saves money.
Inventory management includes the business tasks of
restocking products and making predictions. Management
includes figuring out when to reorder products and how
much to order so that you don't run out of stock or have too
much inventory. It makes sure that the right amount of the
right inventory is in the right place at the right time.
Now that we know how the two are different. Let's now talk
about the system for keeping track of inventory. Inventory
Control System is a technology solution that helps a
company keep track of and manage its goods as they move
through the supply chain. With this technology, purchasing,
shipping, receiving, warehousing, and returns will all be
handled by a single system.

So, we can say that the best inventory control system will
make a lot of tasks that used to be done manually. It will give
you a clear picture of what inventory you have, where it is,
and when you need to reorder to keep your stock at the right
level.

There are two main types of systems for keeping track of

stock. Periodic System, is a system that usually relies on
physical counts. When a physical count is done, information
about the stock is updated. This kind of inventory control
system takes a lot of time for businesses that have a lot of
inventory or move it around a lot. But this kind of inventory
control can work for small businesses that don't get a lot of
orders.

Perpetual inventory systems, on the other hand, use

technology to update your stock in real time whenever a
transaction takes place or when new stock comes in. It makes
it easy to use techniques for inventory management like
Economic Order Quantity (EOQ). EOQ makes sure that there
is enough stock to meet demand while keeping holding and
storage costs to a minimum.

FOR BETTER UNDERSTANDING, WE PREPARED A

VIDEO.

NEXT PRESENTER

SHORT-TERM SOURCES OF FINANCING

CURRENT ASSETS
WHAT ARE THE SOURCES OF SHORT-TERM
FINANCING? When we say unsecured it means no
collateral. While secured sources have collateral attached
to it.
TRADE CREDIT is when we borrow money from other
businesses to buy supplies and materials, and then record the
debt as an account payable. Trade credit ang tawag kapag
umutang or nagpurchase ng inventories on account.

Kapag umutang naman sa banko that’s what we called

Commercial Bank Loan. On the balance sheet, commercial
bank loans are shown as notes payable.

Kapag naman nag-issue ka ng certificate of indetebness

maturing within 1 year ay commercial paper na ang tawag.
Not included : From 1 day up to 270 days ay commercial
paper na ang tawag.
Commercial paper, a third source of short-term credit,
consists of well-established firms’ promissory notes sold
primarily to other businesses, insurance companies, pension
funds, and banks. 

Receivable financing is when you sell unpaid customer

invoices to a company called a "factoring company."
Inventory financing is when a company gets a short-term
loan or a revolving line of credit to buy goods to sell. Most
of the time, this type of small business loan is secured by the
business's existing inventory, and you don't have to put up
any of your own assets as collateral. If you can't pay back the
loan, your products, or inventory, will be used as security.

We will focus on trade credit since it is stated in our syllabus

na our learning outcome is to be able to calculate cost of
trade credit.
So, in trade credit the seller allows the buyer to make
purchases now and pay for them later without having to pay
interest.
Most of the time, sellers offer discounts to encourage buyers
to pay up front. That's when the FREE TRADE CREDIT
happened. It's a credit you got during the discount period.

To better understand the concept of trade credit let’s first

understand the break down ng trade payables.

720,000 annual purchases then we divide it to 365 days.

Then we have, 1,972.60 daily purchases.
And we have 30 days to pay kay we have a total of
accounts payable na 59,178 pesos.
To calculate naman yung free trade credit. If we pay in
the first 10 days magkakaroon tayo ng discount. Kaya
1,972.60 x 10 is 19,726.

Next is the non-free trade credit, also called as costly

trade credit. It is a payment that is made after the end of
the discount period.
Dito tayo magkakaroon ng financing cost since we
sacrifice the discount.
1,972.60 x 20 is equal to 39,452 non-free trade credit.

Next, let’s solve for effective annual cost.

*explain the formula*
WE NOW FIND OUT THAT THE EFFECTIVE
ANNUAL COST IS 44.59%.

Now, let’s solve for nominal annual cost to better

understand if advisable ba na wag magbayad ang
company within the discount period.
SINCE MAS MATAAS ANG EFFECTIVE KAYSA
NOMINAL COST IT IS ADVISABLE NA MAGPAY
NA LANG WITHIN THE DISCOUNT PERIOD.

THERE ARE OTHER WAYS TO SOLVE RIN. IN THE

VIDEO NA IPREPRESENT NAMIN, MAKIKITA
KUNG PAANO ANG INTERPRETATION KAPAG
MAY BINIGAY NA INTEREST RATE.