The inventory valuation simulation report is a management tool in SAP Business One that companies can use to calculate the inventory value based on various Valuation methods recalculate and estimate in what-if scenarios, but do not carry out audits.
Companies in the SME environment use the inventory valuation simulation report to simulate and forecast the inventory value. In doing so, they recalculate the inventory value and do not rely solely on existing accounting data. They can also choose between a classic valuation report and an extended valuation report, which influences the selection criteria available in the report window. The classic report generates standard simulations, while the extended report offers additional options and functions for IFRS requirements, such as filtering out inflation-based revaluations.
The report supports various valuation methods such as moving average price, FIFO and standard costs. If a company uses the extended report, it can also select the Based on Item Definition option so that the system values each item according to the valuation method stored in the item master. Users can also define criteria such as valuation method, currency and key date (To date) in order to control the desired simulation run.
In practical use, companies work with different execution modes: they execute a new simulation (Run), continue an existing simulation (Continue Simulation) or display the results of the last simulation run (Display). Before each run, the application checks the consistency of the inventory data so that the calculation is based on stable data. The simulation has a direct effect on the Last Valued Price of the simulated items; this value is therefore included in the gross profit calculation in sales documents and can be used as the basis for a gross profit simulation in the context menu of a sales document. In companies without continuous inventory management, managers also use the prices determined in the report as the basis for return costs. In this scenario, the report is labelled Inventory Valuation Report, but also provides an estimate of the inventory value for downstream journal entries.
Demarcation:
In contrast to the inventory audit report, the inventory valuation simulation report is not used to audit posted transactions, but to simulate future or hypothetical inventory values. The inventory audit report logs the posted transactions. Inventory Transactions in the chart of accounts and supports the reconciliation between the accounting view (stock balance accounts) and the logistics view (stock value displayed in the report). Consequently, the stock check report is based on existing database entries. The simulation report, on the other hand, recalculates the inventory value and is therefore suitable for what-if analyses by management. In addition, the inventory check report is only available to companies with continuous inventory management, while the Inventory valuation simulation report The inventory valuation report also enables companies without continuous inventory management to estimate the inventory value.
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