Mastering the Maturation Period: Inventory & Sales Cycle

Posted on Mar 28, 2025 in Mathematics

Understanding the Maturation Period

The maturation period of a company is the time it takes from purchasing raw materials to converting them into sales, encompassing warehousing, manufacturing, and sales processes. A longer maturation period necessitates more working capital.

Averaging the Maturation Period

Companies experience various cycles, which can be categorized as:

  • Long-term cycles: These cycles involve fixed assets and span from acquisition to depreciation or renewal.
  • Short-term cycles: These cycles involve current assets, investments lasting less than one year, and are known as the exploitation cycle or maturation period.

The Period of Mean Maturation (PMM) is the time elapsed from the initial investment in raw materials until the investment is recovered through sales revenue.

Components of the Maturation Period

This period includes:

  • The freezing of financial resources for purchasing raw materials, storage, and supplies.
  • The transformation of raw materials into finished products.

Analyzing the PMM

Two methods can be used to study the PMM:

  • Department-by-department analysis.
  • Using accounting data to calculate average period ratios.
  1. PM Collection (Customers)
  2. PM Storage of Raw Materials
  3. PM Production: This ratio can be further divided into two phases if manufacturing is done in stages: an estimated range for current output and one for finished products.
  4. PM to Provider

Codification

Images:

  • Numerical: Easy to remember and detect, but limited in the number of sets possible due to only 10 numbers.
  • Alphabetic: Easier to identify and read. Commonly used due to the many variations possible with 28 letters.
  • Alphanumeric: Combines numerical and alphabetical characters for even greater coding series variations (e.g., license plates).

Criteria:

  • By Structure: Grouping based on quality.
  • By Function: Grouping based on the whole of which it will be a part.
  • By Location: Grouping based on the location of each item.
  • Mixed: A combination of criteria, such as structure and location.

The Bar Code (Coding System)

Barcodes have resolved many business problems related to product identification. Several associations have collaborated to create a universal code. The EAN (European Article Number) system allows consumer units to be identified by an optical scanner that decodes the barcode.

Objectives of Barcodes

  1. Security of cash transactions (reducing errors).
  2. Access to complete and accurate sales information, encrypted by the client.

The most widely used barcode is the EAN-13, which has 13 characters in the identification zone. Its structure is:

EAN Code Structure
  • National Association: A prefix indicating the country (e.g., Spain uses 84).
  • Code Creator: Identifies the product creator, typically companies responsible for the codification of origin. The code should be used by the firm that places the product on the market under its name or brand, controlling the labeling and packaging process.
  • ID Code: Assigned at the discretion of the code creator.