This series is all about Stock Valuation. SAP Business One has 3 types of stock valuation which you can set it up while creating the item master. The first one is the moving average type of stock valuation, the second is first-in-first-out (FIFO) stock valuation and the third is standard stock valuation. Let us go through this one by one. Stock Valuation is a very key feature in any ERP or an accounting system because it helps to understand the value of stock in hand. Not only that, it also helps to know the profitability we make in every sold products. Therefore, Gross profit analysis basically takes input from the Stock Valuation feature. The first one is moving average type which is considered to be the industry’s standard.

 

In Moving average, the system records the purchase price of items which has been procured and average them by quantity. So you can know on any day, what is the average price of the items came in. First-in-first-out method the system assumes that inventory purchased or manufactured first is sold first and newer inventory remains unsold. This method is basically applicable for more sensitive items with frequent change in item price. The last type of valuation is the standard valuation where as a user, you can define standard price of the item which needs to be considered as valuation price. This makes sure that the system doesn’t do any kind of moving average or FIFO calculation and only takes the standard value provided by the user. These are the different types of valuation available in SAP Business one. Hope you like the functionality.

 

 

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