Calculation of a few commonly used profitability
indicators:
Gross
Margin:
GM % = (Selling Price - Cost) x 100 / Selling Price
Example: You sold an item for $49.95, and the cost of the item is
$30.00.
GM % = (49.95 - 30.00) x 100 / 49.95 =
39.94%
Retail Math-Made Simple
3rd
Edition:
Now
you can buy the book with
complete formulas and full explanation
of how to use
them. More Info
$17.95 (Fast, Electronic delivery to
your email in pdf format)
For Printed version, DVD or Webinar options, go
here
Mark Up:
Mark Up % = (Selling Price - Cost) x 100 / Cost
Using the above example,
Mark Up % = (49.95 - 30.00) x 100 / 30.00 =
66.5%
Calculation of a Quick
Inventory Level:
Weeks of Stock:
Inventory (at retail) divided by average weekly sales for
a given period of time.
So, if you have $8,000.00 worth of inventory in one
product, and your total sales of that product for the past
6 weeks is $12,000.00 the calculation would look like this:
$12,000.00 divided by 6 = average weekly
sales of $2,000.00
$8,000.00 divided by $2,000.00 = 4
This means that if you did not replenish your inventory
and sales continued at the same pace, you would deplete your
inventory of that product to zero within 4 weeks.
Arguably, the most
important retail success
indicator:
Gross Margin Return on Inventory Investment (GMROII):
GMROII = GM% x (Sales / Avg. Inventory)
Example: Still using
the same numbers from Gross Margin calculation, assume that the store's net sales
over a period of 12 months is 24M and during this time it carries an average
inventory of 6M. Then:
GMROII % = 39.94 x (24 / 6) =
159.76%
For other Gross Margin Return
Calculations like GMROF and GMROL refer to the Success Guide: Retail Math Made
Simple 3rd Edition.
Retail Math-Made Simple
3rd Edition:
Now
you can buy the book with
complete formulas and full explanation
of how to use
them. More Info
$17.95 (Fast, Electronic delivery to
your email in pdf format)
For Printed version, DVD or Webinar options, go
here
Retail math is considered an integral part of a good retail manager's skill
set. It can be found on some companies'
pre-employment screening tests.
Subscribe to FREE "RetailWise"
Newsletter and get tips, advice and other resources
Retail
Management Training Programs
Best Practices for
Managing a Multi-Unit Retail Operation
Now You Can Get
Quality Training Wherever You Are!
If you own
or are in charge of multiple stores, this is the ultimate training to get.
Everything you need to know to make sure your stores are firing in all
cylinders and zooming fast to success you have not seen before.
"How You Can Reach the Maximum Potential of Your Store"
with
DMSRetail's
Mega Retail
Success Bundle
And Beat the Performance
Curve, FAST
Management
Blueprint to
Create Your Own Retail Success Machine
New! 5 more success
tools and 7 Awesome Bonuses added! Save even more!
Super Retail Success Bundle
The Retail Management Power
Club
Please click on the banner for information
