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Retail Math Formulas

This document defines common retail math formulas and terms used to calculate key metrics like average inventory, cost of goods sold, gross margin, inventory turnover, sell-through rate, and more. It provides examples of how to calculate sell-through rate by dividing the units sold by the beginning on-hand inventory. Maintaining the proper sell-through rate is important for vendors to meet retailers' expectations. Retail buyers often have target sell-through percentages for different product categories.

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Murat Anlı
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347 views6 pages

Retail Math Formulas

This document defines common retail math formulas and terms used to calculate key metrics like average inventory, cost of goods sold, gross margin, inventory turnover, sell-through rate, and more. It provides examples of how to calculate sell-through rate by dividing the units sold by the beginning on-hand inventory. Maintaining the proper sell-through rate is important for vendors to meet retailers' expectations. Retail buyers often have target sell-through percentages for different product categories.

Uploaded by

Murat Anlı
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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RETAIL MATH FORMULAS/ LINGO

Average Inventory
Average Inventory (Month) = (Beginning of Month Inventory + End of Month Inventory)
2
Basic Retailing Formla
Cost of Goods + Markup = etai! "ri#e
etai! "ri#e $ Cost of Goods = Markup
etai! "ri#e $ Markup = Cost of Goods
Brea!"Even Analysis
Break$Even (%) = &i'ed Costs Gross Margin "er#entage
#ontri$tion Margin
Contri(ution Margin = )ota! *a!es $ +aria(!e Costs
#ost o% Goo&s Sol&
C,G* = Beginning Inventory + "ur#hases $ Ending Inventory
Gross Margin
Gross Margin = )ota! *a!es $ Cost of Goods
Gross Margin Retrn on Investment
GM,I = Gross Margin % Average Inventory Cost
Initial Mar!'
Initia! Markup - = (E'penses + edu#tions + "rofit) (.et *a!es + edu#tions)
Inventory Trnover (*to#k )urn)
)urnover = .et *a!es Average etai! *to#k
Maintaine& Mar!'
MM % = (,rigina! etai! $ edu#tions) $ Cost of Goods *o!d
MM - = Maintained Markup % .et *a!es A/ount
Margin (
Margin - = (etai! "ri#e $ Cost) etai! "ri#e
Mar!'
Markup % = etai! "ri#e $ Cost
Markup - = Markup A/ount etai! "ri#e
Net Sales
.et *a!es = Gross *a!es $ eturns and A!!o0an#es
O'en to By
,)B (retai!) = "!anned *a!es + "!anned Markdo0ns + "!anned End of Month Inventory $
"!anned Beginning of Month Inventory
)ercentage Increase/*ecrease
- In#rease12e#rease = 2ifferen#e Bet0een )0o &igures "revious &igure
+ic! Ratio
3ui#k atio = Current Assets $ Inventory Current 4ia(i!ities
Re&ctions
edu#tions = Markdo0ns + E/p!oyee 2is#ounts + Custo/er 2is#ounts + *to#k
*hortages
Sales 'er S,are Foot
*a!es per *5uare &oot = )ota! .et *a!es *5uare &eet of *e!!ing *pa#e
Sell"T-rog- Rate
*e!!$)hrough - = 6nits *o!d 6nits e#eived
*e!! through (or se!!$thru) is a very usefu! /etri# for vendors to use in eva!uating ite/
perfor/an#e (e#ause it provides a #o/posite /easure of sa!es and inventory7 But !ike
/any (usiness /easures there is /ore than one /ethod of #a!#u!ating se!! through7
)he /ost #o//on #a!#u!ation is8 *e!! )hru - = 6nits *o!d 1 (6nits on$9and + 6nits
*o!d)7 *e!! thru is typi#a!!y eva!uated on a dai!y (asis for fast /oving produ#ts or 0eek!y
for s!o0er /oving or rep!enish/ent (ased produ#ts7 A higher va!ue is (etter indi#ating
your sa!es ve!o#ity is good and your inventory is appropriate!y fore#asted7 If se!! thru is
!o0 this indi#ates either poor sa!es or too /u#h inventory7 In /ost #ases se!!$thru for an
ite/ is #o/pared in re#ent periods !ike #urrent 0eek and !ast 0eek: as 0e!! as in
aggregate a#ross severa! /onths or even a year7
;hen eva!uating se!!$through it is a!so usefu! to group together produ#ts 0hi#h have (een
se!!ing for a si/i!ar period of ti/e and1or 0hi#h are so!d into the si/i!ar store types7 &or
e'a/p!e #o/paring se!!$thru for a produ#t 0ith < 0eeks of se!!ing a#tivity against a
produ#t 0ith 2= 0eeks of se!!ing a#tivity /ost !ike!y 0i!! not produ#e a usefu!
#o/parison7 In the sa/e 0ay #o/paring se!!$thru for a produ#t in a group of stores in a
high!y aff!uent area is not !ike!y to #o/pare favora(!y to a group of stores 0ith a !o0
in#o/e !eve!7
Most retai! (uyers have a set se!!$through per#entage they use to >udge vendors (ased on
produ#t #ategory or depart/ent7 It is i/portant for vendors to dis#uss the se!!$thru
e'pe#tations 0ith the (uyer in order to a!ign 0ith those o(>e#tives7
Sell t-rog- ( = units so!d 1 (units so!d . on hand inventory)

*e!!$through is a per#entage of units so!d during a period (for e'a/p!e ? /onth)7
It is #a!#u!ated (y dividing the nu/(er of units so!d (y the (eginning on$hand inventory
(for that sa/e ti/e period)7
E'a/p!e8
2uring the /onth of August you se!! ?== shirts7 @ou re#eived A== shirts in re#eipts7 @ou
end August 0ith B== units shirts of sto#k (End of Month *to#k)7 ;hat 0as your
Beginning ,n$9and units of shirts and 0hat 0as your *e!!$throughC
Beginning of Month sto#k (B,M) = E,M B== units $ e#eipts A== units + *a!es ?==
units = D== units
*e!!$through = *a!es ?== units 1 Beginning Inventory (B,M) D== = ?E7A- *e!!$through
in August7
B,M /eans Beginning of Month
E,M /eans End of Month

Stoc! to Sales Ratio
*to#k$to$*a!es = Beginning of Month *to#k *a!es for the Month
etai! Math Ca!#u!ators
Ca!#u!ator8 Markup F Markdo0n
Ca!#u!ator8 *a!es In#rease
*tartup Costs Ca!#u!ator
)ra#king *a!es
Beat @esterday Book
Measure *a!es "erfor/an#e
etai! *tore ,perations
.e0 posts to the etai!ing foru/s8
2ead sto#k
",* is the heart and sou! for etai!ers
Business na/e idea $ >e0e!!ery
e!ated Arti#!es
etai! Markup Markdo0n Ca!#u!ator
9o0 etai! &ir/s #an In#rease )heir *a!es )hrough Inventory Contro!
Mer#handising Business In#o/e *tate/ent
*a/e *tore *a!es Gune 2==B8 *treaks End for *aks F Bu#k!e: )andy Bu#ks 777
etai! *a!es $ ;hy retai! sa!es are i/portant to our e#ono/y

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