Selling represents an activity highly sought after by companies that offer products or services within a target market. The success of the company is directly related to the number of times it carries out this activity, the scope it achieves, and how well or badly it is done.
So it is important that those who carry out this activity are clear about what it is about. In order to define the concept of mean sales period PMV.
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In this article you will find:
What is the sale?
It is the delivery of a product or service to a buyer, in exchange for receiving a previously scheduled payment.
Coulding be:
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- In cash, paid upon delivery.
- On credit, paid after delivery.
- In installments, it is paid in fractions according to successive deliveries.
In the field of marketing, the sale includes a process by which the seller carries out:
- The identification of the needs, tastes and desires of the buyer.
- The momentum of exchange.
- The satisfaction of customer needs and wishes, in order to achieve a benefit for both parties.
After being clear about this, you can go on to talk Average Sales Period, what it is and how to calculate it.
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Being aware of the number of days it takes to sell a product is essential information in the company, since through it the appreciates how well the business is going, since a company that does not sell or takes a long time to sell its products may be destined to failure.
This is part of the interpretation of the information provided by the PMV, as an economic indicator.
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What is the PMV?
The PMV is an indicator that measures the time from when a product reaches the warehouse after its manufacture, until the moment it leaves the warehouse after it is sold.
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This sub-period is part of the PMM Medium Maturity Period of the company or business.
Elements of the PMV
The main elements that make up this indicator are:
- The average stock of the products sold.
Average stock of products sold = (Initial Stock + Final Stock) / 2
- The average cost per day of the products sold.
Average daily cost = Cost of merchandise sold / 365
How is PMV calculated?
The formula to calculate the average sales period is as follows:
Average Sales Period = Average Stock / Average Cost
In other words, you only have to divide the average existence of the product sold by the average cost per day of the products sold.
Obtaining data
The precise and necessary data to calculate the PMV are obtained in principle from the information provided by the financial Accounting.
In this case, it would provide the average level that affects the entire business. If more specific information is needed, such as by product or activities, then a system of additional information that provides a series of more detailed data on economic activity, such as the accounting system cost.
Results
When talking about PMV, it must be taken into account that the excess of days elapsed with the permanence of the merchandise in the warehouse, that is, without being able to be sold, negatively affects the liquidity, therefore, the stability and viability of the company and the business.
In this sense, the acceptable level will depend on the sector where you work and the type of business that is managed. For example, the same level will never be acceptable for a perishable goods business as for a shoe business.
It should be clear that once the appropriate level for the business has been established, it should aspire to maintain it and even reduce it as much as possible.
