Some of the most useful information generated by The Book Wizard is the Summary Financial Data. When you first set up The Book Wizard, you create an organization structure containing departments, categories, and sections, based on the merchandise that you carry in your store. For example, a children's bookstore might have books, toys, audio and sidelines departments. Some categories of the book department might be baby and toddler, preschool, early reader, foreign language, young adult, etc. The preschool category by be divided into hard cover picture books, paper back picture books and early education sections.
Each element in the organization structure generates monthly, and year-to-date, summary records. These records contain the inventory turns, inventory valuation, sales, and returns data for the entire store as well as each department, category, and section. The Book Wizard tracks inventory on a FIFO (first-in-first-out) basis. What this means is that the on hand inventory valuations, at cost, represents the exact value of the inventory that is in the store at that time. This is not an average value or a best guess value, but the amount that you actually paid for the inventory. Likewise, the cost-of-sales is the exact amount that you paid for the merchandise that was sold during the month.
The summary records are used to create graphs and reports that will give you a clear picture of how your mix of inventory is performing. One of our main goals is to help you increase your inventory turns and the excellent graphing capabilities of The Book Wizard gives you the visual tools to help you find problem areas. How your inventory is selling, in relation to the amount of money invested, will identify poorly performing areas as well as areas that should be expanded. In the following example the value of the inventory, at cost, is compared to sales at cost. Using the four main departments of a children's bookstore the first pie chart shows what percentage of the total inventory is represented by each department. The second pie chart shows the percentage of sales, at cost, that each department generates.
Ideally, the percentages on both charts should be the same, but in this example there are some clear differences. Look at the sideline department, only 3% of the inventory is generating 9.5% of sales and 4.9% of toys are accounting for 6% of sales. Now look at the book department, 82% of inventory is only generating 74% of sales. The categories and sections of the book department can be examined using the same techniques that were used to create the first pie charts. Any problem areas can be quickly identified and the inventory adjusted. Perhaps you will find that cookbooks are out performing poetry and history, indicating that you should add more cookbooks and reduce the other two sections. In the first example, you may decide to add more toys and sidelines after you have trimmed the deadwood from the book department. Adjusting and fine tuning the inventory will ultimately increase inventory turns.
A variety of reports can be generated from the summary records using The Book Wizard's powerful reporting capabilities. The inventory turns report will identify problem areas by showing you how much revenue is being produced by each category or section. Look at toys, $14,846 worth of inventory generates $6,705 in sales yielding $3,250 net. But $21,721 worth of nonfiction books nets only $2,403 from $6,038 in sales. There is high interest and better margins in toys and low interest in nonfiction books. It's time to move some nonfiction books to the sale table and invest in more toys.
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