Option pricing methods. the fit is always a big challenge for many businesses. In this article Accnet will help you understand each method of valuation of stock of popular in-depth analysis pros - cons, suggestions choosing the optimal solution for the business.
1. The method of calculating the price of stock is what?
The method of calculating the price of stock is the way in determining the value of goods out of the warehouse to charged to cost of goods sold (COGS) on the financial statements.
Under circular no. 200/2014/TT-BTC and circular 133/2016/TT-BTC, the business can choose one of the methods of determining the price of stock now.
2. The method of calculating the price of stock popular today
In this section, Accnet will analyze in detail the method of determining the price of stock popular today, accompanied by the recipe, illustrative examples.
2.1. Method weighted average (Average Cost)
This method calculate the value of stock based on the average value of current inventory. Specific formula is as follows:
- Unit price average = Total value of inventory the beginning of the period + Total value of income in the period / Total amount of inventory the beginning of the period + Total number of goods in the states.
- Value of stock = Number of rows of stock × unit Price average.
Examples illustrate the method of calculating the price. the Average Cost
- First period: 100 products, the unit price 10.000 VND/products → value = 1.000.000 VND.
- Enter in: 200 products, the unit price 12.000 VND/products → value = 2.400.000 VND.
- Warehouse export: 150 products.
Calculation:
- Unit price average = (1.000.000 + 2.400.000) ÷ (100 + 200) = 11.333 VND/product.
- Value of stock = 150 x 11.333 = 1.699.950 VND.
2.2. The method of calculating the price of stock before cumshot first (FIFO - First In, First Out)
FIFO method assumes that the goods enter the warehouse, the first will be prerendered. Recipe based on the warehousing of the first batch.
Illustrative example
- First period: 100 products, the unit price 10.000 VND/product.
- Enter in: 200 products, the unit price 12.000 VND/product.
- Warehouse export: 150 products.
Calculation:
- 100 first product obtained from plots price 10.000 → 100 x 10.000 = 1.000.000 VND.
- 50 next product taken from the plots of price 12.000 → 50 x 12.000 = 600,000 VND. → The total value of stock = 1.000.000 + 600.000 = 1.600.000 VND.
2.3. Method enter the following export ago (LIFO - Last In, First Out)
The method of calculating the price of stock LIFO assumes that goods enter the following will be prerendered, calculate the price of stock based on the unit price of the shipment to enter the nearest.
Illustrative example
- First period: 100 products, the unit price 10.000 VND/product.
- Enter in: 200 products, the unit price 12.000 VND/product.
- Warehouse export: 150 products.
Calculate: 150 products taken from the plots of price 12.000 → 150 x 12.000 = 1.800.000 VND.
2.4. Rating method, the actual purpose of the (Specific Identification)
The method of calculating the price of stock this determines the price of stock accurately for each specific shipment, apply to goods with high value or easily recognized.
Illustrative example
- Lot 1: Computer A, unit price 15.000.000 VND.
- Lot 2: Computer B, unit price 20,000,000 VND.
- Stock: 1 pc and 1 pc B → value of stock = 15.000.000 + 20.000.000 = 35.000.000 USD.
3. Comparison of the method of valuation of stock
To help businesses choose the correct, below is a table comparing the methods of valuation of stock:
| Method | Advantages | Cons | Matching |
| Weighted average | Simple, easy to implement | Not exactly when price fluctuations | Small and medium ENTERPRISES, the less volatility the price |
| Enter before, before | Suitable bank limited use | Arbitrage capital as prices rise | DN food products, pharmaceutical products |
| Enter the following export ago | Suitable phase to increase sharply | Don't accept standards IFRS | DN't need management term use |
| Price real purpose of the | Absolute accuracy | Cost tracking, management | DN high-value goods |
4. Factors affecting the choice of method, calculate the price of stock of the business
Below are the important factors that businesses need to consider:
4.1. Scale, industry operation of the business
- Small and medium business: Often choose the method of weighted average because of its simplicity, easy to carry.
- Big business/manufacturing food products, pharmaceutical products: FIFO Method more suitable for goods was before the expiration.
- Business goods are of high value: the Method of the actual price purpose is the preferred option.
4.2. Requirements of accounting standards
In Vietnam, the business needs to comply with circular 200 and circular 133. However, if the business is geared to international standards IFRS, the method LIFO is not acceptable.
4.3. Ability to apply warehouse management software
The accounting software inventory now supports the calculation, recorded more automatic method, calculate the price of stock as FIFO, weighted Average.
4.4. Fluctuations in raw material prices
In terms of market price volatility:
- FIFO will increase the accounting profit when price increases, but the increase in tax payable.
- LIFO up accounting profit in the short term, but do not conform with international standards.
5. Software solutions support factory warehouses automatic
Software LV DX Inventory of Lac Viet is designed to process optimization, inventory management, business support, calculate the price of stock automatically. With friendly interface, powerful features, the software helps:
- Save time data processing.
- Ensure compliance with accounting regulations.
- Enhance effective management of goods warehouse.
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The choice of the method of calculating the price of stock always affect the price of goods sold, profits in the financial statements of the business. So, businesses should carefully choose the method of calculation from the beginning. Select software solutions LV DX Inventory now!
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