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    Guide To Retail Math Key Formulas

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    Jitender Bhardwaj
    This document defines key performance indicators (KPIs) used to measure retail business performance across various areas such as sales, profit, employee productivity, inventory productivity, return on assets, and space productivity. Formulas are provided to calculate metrics like average transaction value, conversion rate, sales per employee, inventory turnover, return on net assets, sales per square foot, and transactions per square foot. Examples are also given to demonstrate how the formulas are used.

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    Guide To Retail Math Key Formulas

    Uploaded by

    Jitender Bhardwaj
    1K views1 page
    This document defines key performance indicators (KPIs) used to measure retail business performance across various areas such as sales, profit, employee productivity, inventory productivity, return on assets, and space productivity. Formulas are provided to calculate metrics like average transaction value, conversion rate, sales per employee, inventory turnover, return on net assets, sales per square foot, and transactions per square foot. Examples are also given to demonstrate how the formulas are used.

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    Brief Guide to Retail Math Key Formulas

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    Guide to Retail Math Key Formulas

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    This document defines key performance indicators (KPIs) used to measure retail business performance across various areas such as sales, profit, employee productivity, inventory productivity, return on assets, and space productivity. Formulas are provided to calculate metrics like average transaction value, conversion rate, sales per employee, inventory turnover, return on net assets, sales per square foot, and transactions per square foot. Examples are also given to demonstrate how the formulas are used.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    1K views1 page

    Guide To Retail Math Key Formulas

    Uploaded by

    Jitender Bhardwaj
    This document defines key performance indicators (KPIs) used to measure retail business performance across various areas such as sales, profit, employee productivity, inventory productivity, return on assets, and space productivity. Formulas are provided to calculate metrics like average transaction value, conversion rate, sales per employee, inventory turnover, return on net assets, sales per square foot, and transactions per square foot. Examples are also given to demonstrate how the formulas are used.

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    © All Rights Reserved
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    of 1

    Retail Formulas, Definitions and Examples

    KPI Measurement Formula Expressed As Example

    Sales
    Average Transaction Value Gross Sales / Number of Transactions Currency $25,550 / 1,200 = $21.25
    Items per Transaction Number of Items Sold / Number of Transactions Number 3,800 / 1,200 = 3.16
    Conversion Rate Number of Transactons / Footfall Percent 1,200 / 3,600 = 33.3%
    Sales per hour Gross Sales / Hours open for a period of time Currency $15,047 / 1,954 =

    Profit
    Gross Profit Sales - Cost of Goods (COGs) Currency $1,279,015-$778,025 = $500,990
    Gross Profit Margin Gross Profit / Sales Percent $500,990 / $1,279,015 = 39.1%
    Net Profit Margin Net Profit (after tax) / Sales Percent $10,993 / $1,279,015 = .9%
    Maintained Gross Profit Gross Profit - Shrink Currency $500,990 - $50,990 = $450,000
    Maintained Gross Margin Gross Profit (minus shrink) / Sales Percent $450,000 / $1,279,015 = 35.2%

    Employee Productivity
    Sales per Employee Sales / number of (full time equivalent) employees Currency $1,279,015 / 19.5 = $65,591
    Sales per Payroll Hour Sales / Number of Payroll Hours Currency $1,279,015 / 741 = $1,726
    Gross Profit per Employee Gross Profit / number of (full time equivalent) employees Currency $566,118 / 19.5 = $29,032
    Employee to Customer Ratio Total Customers in Store / Total Employees in Store Ratio 18/3 = 6

    Inventory Productivity
    Inventory Turnover Cost of Goods Sold / Value of Inventory Number $778,025 / $3,236,584 = 4.16 turns per annum
    Inventory Shrink Estimated Inventory Value - Actual Inventory Value (after physical count) Currency $3,236,584-$3,191,036 = $48,548
    Inventory Shrink Percent Invneoty Shrink / Estimated Inventory Value Percent $48,548 / $3,236,584 = 1.5%
    Gross Margin Return on Investment (GMROII) Gross Profit Dollars / Average Inventory @Cost Currency $566,118 / $168,673 = $3.36
    Planned Sales + Planned Markdowns + Planned End of Month Inventory - Planned Beginning of
    Open to Buy at Retail Month Inventory Currency $1,279,015 + $50,000 + 1,225,000 - 1,300,000 = $1,254,015
    Open to Buy at Cost Open to Buy at Retail x Average Gross Margin of Profit Currency $1,254,015 X 39.1 = $490,319

    Return on Assets
    - Before Tax & Interest Net Profit (EBIT) / Total Assets Percent $17,395 / $523,037 = 3.3%
    - After Tax & Interest Net Profit (after tax) / Total Assets Percent $10,993/$523,037 = 2.1%
    Return on Net Assets (RONA) Net Profit (after tax) / Net Assets Percent $10,993 / $176,168 = 6.2%

    Space Productivity
    Sales per Store Sales / Number of Stores Currency $1,279,015 / 2 - $639,508
    Sales per Sq. Foot
    - Selling area Sale/Selling Space (excludes all but sales floor) Currency $1,279,015 / 10,000 - $127.90
    - Total area Sales / Total Store Space Currency $1,279,015 / $17,500 = $73.09
    Gross Profit per Sq. Foot
    - Selling area Gross Profit / Selling Space Currency $566,118/10,000 = $56.61
    - Total area Gross Profit / Total Space Currency $566,118/17,500 = $32.35
    Transactions per Sq. Foot
    - Selling area Toal Sales Transactions / Selling Space Ratio 25,140 / 10,000 = 2.51
    - Total area Total Sales Transaction / Total Space Ratio 25,140 / 17500 = 1.44

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