Use your inventory report to calculate shrinkage as a percent of sales. What factors might
affect the amount of shrinkage in your stock?

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Use your inventory report to calculate shrinkage as a percent of sales. What factors might affect the amount of shrinkage in your stock?

UpStudy AI · Accepted Answer

1. **Determine the Shrinkage Value:**  
   The shrinkage value represents the difference between the book inventory and the actual physical inventory. It is calculated as:  
   $$
   \text{Shrinkage Value} = \text{Book Inventory} - \text{Physical Inventory}
   $$

2. **Calculate Shrinkage as a Percent of Sales:**  
   To express the shrinkage as a percentage of sales, use the formula:  
   $$
   \text{Shrinkage \%} = \left(\frac{\text{Shrinkage Value}}{\text{Sales}}\right) \times 100\%
   $$
   Substitute the shrinkage value found in step 1 and the total sales figure into the formula.

3. **Factors Affecting the Amount of Shrinkage:**  
   Several factors can influence the shrinkage in stock, including:  
   - **Theft:** Losses due to employee theft or shoplifting.  
   - **Administrative Errors:** Mistakes in recording inventory or processing transactions.  
   - **Supplier Fraud or Errors:** Incorrect shipments or invoicing issues from vendors.  
   - **Damage and Spoilage:** Products damaged during handling or unsellable due to expiration or poor storage.  
   - **Process Inefficiencies:** Poor inventory management practices leading to misplacement or counting errors.

By following the above steps and taking these factors into account, you can accurately calculate and analyze shrinkage as a percentage of sales.
To calculate shrinkage as a percent of sales, subtract the physical inventory from the book inventory to find the shrinkage value, then divide by total sales and multiply by 100%. Factors affecting shrinkage include theft, administrative errors, supplier issues, product damage, and inefficient inventory processes.

Use your inventory report to calculate shrinkage as a percent of sales. What factors might
affect the amount of shrinkage in your stock?

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