What is one way to measure stock effectively?

Measuring stock effectively is crucial for inventory management, as it directly impacts a business's ability to meet customer demand and optimize costs. Conducting a physical count of inventory and recording stock movement is an effective way because it provides an accurate snapshot of the current inventory levels. This approach helps identify discrepancies between expected and actual stock on hand, which can arise from various factors such as theft, damage, or accounting errors.

Additionally, this method allows businesses to monitor stock levels continually, making it easier to make informed decisions regarding reordering, restocking, and managing cash flow. By integrating physical counts with stock movement records, it creates a comprehensive view of inventory dynamics, enabling better forecasting and planning.

While the other methods have their merits, they do not provide the same level of accuracy or real-time insights as a physical count combined with recorded movements. For instance, estimating stock levels annually may lead to significant inaccuracies, and relying solely on historical sales data or supplier-provided data might not account for current market conditions or changes in customer preferences.