Using inventory valuation

Inventory valuation is a quintessential accounting procedure that calculates the value of on-hand stock. Once determined, the inventory valuation amount is then incorporated into a company’s overall value.

In Odoo, this process can be conducted manually— by warehouse employees physically counting the products— or automatically through the database.

Understand the basics of inventory valuation

In order to understand how moving products in and out of stock affects the company’s overall value, consider the following product and stock moves scenario below.

Recibir un producto

For example, consider an physical product, a simple table, which is categorized as Office Furniture in the product form’s Product Category field.

Navigate to the the product category itself by going to Inventory app ‣ Configuration ‣ Product Categories, and on the form, set the Costing Method as First In First Out (FIFO) and the Inventory Valuation field as Automated.

Truco

Alternatively access the Product Categories dashboard by clicking on the internal link arrow on the individual product’s form, by hovering over the Product Category field.

Next, assume 10 tables are purchased at a price of $10.00, each. The PO for those tables will show the subtotal of the purchase as $100, plus any additional costs or taxes.

Purchase order with 10 tables products valued at $10 each.

After selecting Validate on the PO, use the Valuation smart button to view how the value of inventory was impacted.

Valuation smart button on a receipt.

Importante

Developer mode must be turned on to see the Valuation smart button.

Truco

The consignment feature allows ownership to items in stock. Thus, products owned by other companies are not accounted for in the host company’s inventory valuation.

The Stock Valuation dashboard then displays valuation of all products in the shipment, along with their quantities and valuation. In the example of 10 tables being purchased, the Total Value column of the dashboard would display a calculated valuation of $100.

Stock valuation page depicting the products within a shipment.

In Odoo, automatic inventory valuation records are also recorded in the Accounting app. To access these accounting entries, navigate to Accounting ‣ Journal Entries, and look for inventory valuation entries with the STJ prefix in the Journal and Number columns, respectively.

Accounting entry for the inventory valuation of 10 tables.

Entregar un producto

In the same logic, when a table is shipped to a customer and leaves the warehouse, the stock valuation decreases. The Valuation smart button on the DO, likewise, displays the stock valuation record as it does on a PO

Decreased stock valuation after a product is shipped.

El reporte de valoración de inventario

To view the current value of all products in the warehouse, go to Inventory app ‣ Reporting ‣ Inventory Valuation. The records in the table are organized by product, and selecting a product’s drop-down menu displays detailed records with the Date, Quantity, and Total Value of the inventory.

Inventory valuation report showing multiple products.

Nota

The Inventory At Date button, located in the top-left corner of the Stock Valuation dashboard, shows the inventory valuation of products available during a prior specified date.

Update product unit price

For any company: lead times, supply chain failures, and other risk factors can contribute to invisible costs. Although Odoo attempts to accurately represent the stock value, manual valuation serves as an additional tool to update the unit price of products.

Importante

Manual valuation is intended for products that can be purchased and received for a cost greater than 0, or have product categories set with Costing Method set as either Average Cost (AVCO) or First In First Out (FIFO).

Add manual valuation of stock value to a product.

Create manual valuation entries on the Stock Valuation dashboard by first navigating to Inventory app ‣ Reporting ‣ Inventory Valuation, and then click the little gray drop-down icon to the left of a product’s name, to then reveal stock valuation line items below as well as a teal + (plus) button on the right.

Click the teal + (plus) button to open up the Product Revaluation form, where updates to the calculation of inventory valuation can be made, by increasing or decreasing the unit price of each product.

Product revaluation form adding a value of $1.00 with the reason being inflation.