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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