## How do you calculate portfolio return?

How Do I Calculate Rate of Return of a Stock Portfolio?Subtract the starting value of the stock portfolio from then ending value of the portfolio. Add any dividends received during the time period to the increase in price to find the total gain. Divide the gain by the starting value of the portfolio to find the total rate of return. Add 1 to the result.

## How do you calculate portfolio risk return?

The risk of a portfolio is measured using the standard deviation of the portfolio. However, the standard deviation of the portfolio will not be simply the weighted average of the standard deviation of the two assets. We also need to consider the covariance/correlation between the assets.

**How do you calculate excess return on a portfolio?**

Excess return is identified by subtracting the return of one investment from the total return percentage achieved in another investment. When calculating excess return, multiple return measures can be used. Some investors may wish to see excess return as the difference in their investment over a risk-free rate.

**Is excess return the same as Alpha?**

Alpha is thus also often referred to as “excess return” or “abnormal rate of return,” which refers to the idea that markets are efficient, and so there is no way to systematically earn returns that exceed the broad market as a whole.

### What is Excess Return Index?

Excess return, which can be positive or negative, tells you the extent to which a fund has out or underperformed its benchmark index. It is calculated as the fund’s net asset value (NAV) total return less the benchmark’s total return.

### How do you calculate expected return?

The expected return is the amount of profit or loss an investor can anticipate receiving on an investment. An expected return is calculated by multiplying potential outcomes by the odds of them occurring and then totaling these results.

**How do you calculate annualized excess return?**

The annualized mean monthly excess return is simply the mean monthly excess return times 12. The annualized monthly standard deviation of excess return equals the monthly standard deviation of excess return times the square root of 12.

**How do you calculate excess stock?**

Excess stock calculationThe Average Daily Sales= the Total of All the Monthly Sales/(365 – Days Left in Month)The target stock = Threshold x Average Daily Sales.The excess stock = SOH – Target Stock.Another way to calculate average inventory is;Re-merchandise or remarket.Discounting items.

#### How do you handle excess stock?

Here are 10 ways that might help you reduce your excess inventory.Return for a refund or credit. Divert the inventory to new products. Trade with industry partners. Sell to customers. Consign your product. Liquidate excess inventory. Auction it yourself. Scrap it.

#### How do you account for excess inventory?

Excess Inventory This requires a journal entry debiting the amount of inventory and crediting that same amount to a category such as “inventory write-down” on the income statement.

**Why is having too much inventory bad?**

Excess inventory can lead to poor quality goods and degradation. If you’ve got high levels of excess stock, the chances are you have low inventory turnover, which means you’re not turning all your stock on a regular basis. Unfortunately, excess stock that sits on warehouse shelves can begin to deteriorate and perish.

**Is it better to have more inventory or less?**

If you can no longer sell a product, it’s considered “worthless” and taken out of inventory. The loss will result in slightly higher COGS, which means a larger deduction and a lower profit. There’s no tax advantage for keeping more inventory than you need, however.

## What are the disadvantages of inventory?

High Costs Also, the more inventory you hold, the more you have to spend on labor to manage it, space to hold it, and in some cases, insurance to protect against its loss or damage. Physically counting and monitoring the levels of inventory you hold also takes time and has costs.

## What are the consequences of overstocking?

Overstocking. Ordering too much product results in higher costs, including storage and warehousing, and losses due to obsolescence, shrinkage, and deterioration of products.

**What causes overstocking?**

Common Causes of Overstocking The uncertainty of not knowing when orders will arrive can mean requiring more inventory in order to cover yourself. When the demand for a product varies, this forces a business to maintain a safety net of stock to cover any unexpected or heightened surge in sales for that item.

**What are the consequences of not carrying inventory?**

Not having enough inventory means you run the risk of losing sales during a stock out. On the other hand, having too much can also be costly in many ways. Without an inventory management system, you risk these costs and other areas of inefficiency.

### What is poor stock control?

Efficient stock control (inventory) will mean you have the right amount of stock in the right place at the right time. It ensures that capital is not tied up unnecessarily, and protects production when there are problems with the supply chain.

### What are some of the signs of poor inventory management?

Poor Inventory Management SymptomsA high cost of inventory.Consistent stockouts.A low rate of inventory turnover.A high amount of obsolete inventory.A high amount of working capital.A high cost of storage.Spreadsheet data-entry errors.Shipping the wrong items to customers.

**How do you fix inventory problems?**

The 9 steps you need to solve your inventory problemsDefine the problem. Determine the value for each category. Develop auditing and reporting procedures to track the problem. Establish inventory problem levels as a standard performance measurement. Create a short-term cure. Plan and schedule the disposal of problem stock. Determine the causes of the inventory problems.

**Why does it cost to hold stock?**

The aim of stock control is to minimise the cost of holding these stocks whilst ensuring that there are enough materials for production to continue and be able to meet customer demand. This is the “safe” amount of stock that needs to be held to cover unforeseen rises in demand or problems of reordering supplies.