Periodic Inventory by Three Methods; Cost of Merchandise Sold The un.pdf
Sales formulas
1. Sales Formulas
Average Inventory
Average Inventory (Month) = (Beginning of Month Inventory + End of Month Inventory) ÷ 2
Basic Retailing Formula
Cost of Goods + Markup = Retail Price
Retail Price - Cost of Goods = Markup
Retail Price - Markup = Cost of Goods
Break-Even Analysis
Break-Even ($) = Fixed Costs ÷ Gross Margin Percentage
Contribution Margin
Contribution Margin = Total Sales - Variable Costs
Cost of Goods Sold
COGS = Beginning Inventory + Purchases - Ending Inventory
Gross Margin
Gross Margin = Total Sales - Cost of Goods
Gross Margin Return on Investment
GMROI = Gross Margin $ ÷ Average Inventory Cost
Initial Markup
Initial Markup % = (Expenses + Reductions + Profit) ÷ (Net Sales + Reductions)
Inventory Turnover (Stock Turn)
Turnover = Net Sales ÷ Average Retail Stock
Maintained Markup
MM $ = (Original Retail - Reductions) - Cost of Goods Sold
MM % = Maintained Markup $ ÷ Net Sales Amount
Margin %
Margin % = (Retail Price - Cost) ÷ Retail Price
Markup
Markup $ = Retail Price - Cost
Markup % = Markup Amount ÷ Retail Price
2. Net Sales
Net Sales = Gross Sales - Returns and Allowances
Open to Buy
OTB (retail) = Planned Sales + Planned Markdowns + Planned End of Month Inventory - Planned Beginning
of Month Inventory
Percentage Increase/Decrease
% Increase/Decrease = Difference Between Two Figures ÷ Previous Figure
Reductions
Reductions = Markdowns + Employee Discounts + Customer Discounts + Stock Shortages
Sales per Square Foot
Sales per Square Foot = Total Net Sales ÷ Square Feet of Selling Space
Stock to Sales Ratio
Stock-to-Sales = Beginning of Month Stock ÷ Sales