7/22/2011
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[email protected] | www.WhizBangTraining.com | 616-842-4237
[email protected] | www.WhizBangTraining.com | 616-842-4237
Retail MathRetail MathImportant Calculations,
What They Mean, and
How You Can Use Them to
Boost Sales and Profits
7/22/2011
2
[email protected] | www.WhizBangTraining.com | 616-842-4237
Items per Sale
number items / number of transactions
127 items / 39 transactions = 3.2 items per sale
Low items per sales probably indicates thatthe employee isn’t consistently adding on.
Employee Equations
[email protected] | www.WhizBangTraining.com | 616-842-4237
Average Sale
total dollars sold / total number of transactions
$1083 / 39 transactions = $27.76 avg. sale
Low average sale usually means- • the employees isn’t adding on • OR is not selling higher priced goods, • OR both!
Employee Equations
7/22/2011
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[email protected] | www.WhizBangTraining.com | 616-842-4237
Sales Volume Per Hour
total sales / total hours worked
$1083 / 7.75 hours = $139.74 per hour
• Low SVPH along with low items per sale and low average sales means poor selling skills.
• Low SVPH with HIGH items per sale and average sale means not enough time spent selling!
Employee Equations
[email protected] | www.WhizBangTraining.com | 616-842-4237
Sales Per Sq. Foot
total sales / selling sq. footage
$632,546 / 1281= $493.79 per sq. ft.
• Measure of efficiency/productivity• Compare departments, vendors• Can be used with linear feet
Sales Calculations
7/22/2011
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[email protected] | www.WhizBangTraining.com | 616-842-4237
[email protected] | www.WhizBangTraining.com | 616-842-4237
Average Stock
Sum Beginning of Month Stock ÷Number of Months
$1,432,794 ÷ 12 = $119,400
• Usually, a year calculation• At retail $ or at cost $
Inventory Calculations
7/22/2011
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[email protected] | www.WhizBangTraining.com | 616-842-4237
Inventory Turnover
Inventory Calculations
Sales ÷ Average Stock
$300,00 ÷ $100,000 = 3.0
• Velocity of merchandise• Cash flow• Too high – out of stocks
[email protected] | www.WhizBangTraining.com | 616-842-4237
National Averages by Industry
For Sole Proprietorship
Businesses
Annual Inventory
Turnover
Lumber & Building Materials 7.7
Paint, Glass & Wallpaper 4.5
Hardware Stores 3.0
Retail Nurseries & Garden Supply 5.1
General Merchandise Stores 6.5
Auto Parts & Accessories 4.7
Apparel & Personal Accessories 3.2
Furniture & Home Furnishings 5.0
Liquor Stores 6.4
Antiques & Used Merchandise 1.7
Sporting Goods 4.4
Gift, Novelty & Souvenir Shops 2.9
Other Retail Stores 3.7
7/22/2011
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[email protected] | www.WhizBangTraining.com | 616-842-4237
Cost of Goods Sold
Inventory Calculations
Beginning Inventory + Purchases - Ending Inventory
$320,347 + $90,853 – $310,295 = $100,905
• Purchases includes freight• Can evaluate by dept, by vendor
[email protected] | www.WhizBangTraining.com | 616-842-4237
Gross Margin
Inventory Calculations
Sales – Cost of Goods Sold
$32,826 – $14,739 = $18,087
7/22/2011
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[email protected] | www.WhizBangTraining.com | 616-842-4237
Initial Markup
Inventory Calculations
Profit% + MD% + % Expense ÷100 + MD%
8% + 15% + 37% = 52.2%100% + 15%
[email protected] | www.WhizBangTraining.com | 616-842-4237
Gross Margin
Return on Inventory(GMROI)
Inventory Calculations
$ Gross Margin ÷ Average Inventory @ Cost
$240,000 ÷ $100,000 = 2.45
• For every $1.00 you invest, you get back $2.45• Compare departments, vendors
7/22/2011
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[email protected] | www.WhizBangTraining.com | 616-842-4237
Current Ratio
Financial Calculations
Current Assets ÷ Current Liabilities
$472,002 ÷ $385,638 = $1.22
[email protected] | www.WhizBangTraining.com | 616-842-4237
Quick Ratio
Financial Calculations
Current Assets - Inventory ÷ Current Liabilities
$472,002 – 52,185 ÷ $405,638 = $1.03