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    Module 4

    Uploaded by

    Vanessa Erika Labra

    Copyright:

    © All Rights Reserved
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    Module 4

    Uploaded by

    Vanessa Erika Labra
    2 views17 pages

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    2 views17 pages

    Module 4

    Uploaded by

    Vanessa Erika Labra

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
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    MODULE 4

    MANAGING
    RETAIL
    OPERATIONS
    M A N A G I N G A R E TA I L E R ’ S F I N A N C E S

    MERCHANDISING IS THE PLANNING AND


    CONTROL OF THE BUYING AND SELLING OF
    G O O D S A N D S E RV I C E S T O H E L P T H E R E TA I L E R
    R E A L I Z E I T S O B J E C T I V E S . I T C A N B E S A I D T H AT
    THE SUCCESS OF MERCHANDISING IS DUE TO
    T H E R E S U LT O F T O T A L F I N A N C I A L P L A N N I N G A N D
    CONTROL
    THE MERCHANDISING BUDGET

    MERCHANDISING BUDGET IS A PLAN OF


    PROJECTED SALES FOR UPCOMING SEASON,
    WHEN AND HOW MUCH MERCHANDISE, IS TO BE
    PURCHASED, AND W H AT M A R K- U P S AND
    R E D U C T I O N S W I L L L I K E LY O C C U R
    THE FOUR (4) RULES OF MERCHANDISE
    BUDGET
    1.A M E R C H A N D I S E B U D G E T S H O U L D A L W A Y S B E
    P R E PA R E D IN A DVA N C E OF THE SELLING
    SEASON.
    2.T H E LANGUAGE TO BE USED IN BUDGET
    P R E PA RAT I O N M U S T B E S I M P L E A N D E A S Y T O
    U N D E R S TA N D S O T H AT C O M PA N Y P U RC H A S E R S
    W I L L N O T C O M M I T M I S TA K E S I N B U Y I N G T H E
    ITEMS.
    3.T H E M E R C H A N D I S E B U D G E T M U S T B E P L A N N E D
    F O R A R E L A T I V E LY S H O R T P E R I O D O F T I M E
    S I N C E E C O N O M Y I S C O N S I S T E N T LY C H A N G I N G .
    4.T H E B U D G E T S H O U L D B E F L E X I B L E E N O U G H T O
    PERMIT CHANGES. ALL MERCHANDISE PL ANS OR
    DETERMINING PLANNED SALES

    THE INITIAL STEP IN DEVELOPING A SIX MONTH


    MERCHANDISE BUDGET S TA RT S WITH THE
    E S T I M AT I O N OF PLANNED SALES FOR THE
    ENTIRE SEASON, AS WELL AS, FOR EACH MONTH.
    T H E B U Y E R S B E G I N BY E X A M I N I N G S A L E S T H E
    PREVIOUS YEAR’S RECORDED SALES.
    P L A N N E D M O N T H LY S A L E = P L A N N E D
    M O N T H LY S A L E S P E R C E N T A G E X P L A N N E D
    T O TA L S A L E S
    G I V E N : P L A N N E D M O N T H LY S A L E S % = 1 5 %
    P L A N N E D T O TA L S A L E S = P H P 5 0 0 ,
    000

    T H E N , P L A N N E D M O N T H LY S A L E =
    (0.15 X 500,000 = PHP75,000)

    T O TA L S A L E S = AV E R A G E S A L E X T O TA L
    TRANSACTIONS
    G I V E N : A V E R A G E D M O N T H LY S A L E S = P H P 6 0 ,
    000 T O TA L T RA N S A C T I O N S =
    4,000

    T H E N , T O TA L S A L E S =
    (60,000 X 4,000) = PHP240,000,000
    DETERMINING PLANNED BEGINNING OF THE
    MONTH (BOM) AND END OF THE MONTH
    (EOM) INVENTORIES

    TA R G E T T U R N O V E R RAT E = 4 . 0
    NUMBER OF MONTHS/YEAR = 12

    THEN BOM S T O C K-T O - S A L E S = NUMBER OF


    M O N T H S / Y E A R ÷ TA R G E T T U R N O V E R RAT E

    12 ÷ 4 = 3
    D E T E R M I N I N G P L A N N E D R E TA I L R E D U C T I O N S

    IT SHOULD BE NOTED T H AT NOT ALL


    MERCHANDISE BROUGHT INSIDE THE STORE ARE
    S O L D AT T H E PA N N E D I N I T I A L M A R K U P P R I C E .
    THEREFORE, IT IS N E C E S S A RY T H AT IN
    P R E PA R I N G T H E M E RC H A N D I S I N G B U D G E T , T H E
    BUYER SHOULD MAKE A L LO WA N C E S FOR
    REDUCTIONS IN THE PESO LEVEL OF THE
    I N V E N T O RY T H AT R E S U LT S FROM NON-SALE
    EVENTS.
    D E T E R M I N I N G T H E R E TA I L B U Y E R ’ S P L A N N E D
    GROSS MARGIN

    T H E R E TA I L E R ’ S B U Y E R I S R E S P O N S I B L E F O R
    MTHE PURCHASES MADE, THE EXPECTED
    SELLING PRICE OF THESE PURCHASES, THE COST
    OF THESE PURCHASES, AND THE REDUCTIONS
    T H AT A R E I N V O LV E D I N S E L L I N G M E R C H A N D I S E
    T H A T B U Y E R H A S P R E V I O U S LY P U R C H A S E D .
    T H E U S E O F A C C O U N T I N G S TAT E M E N T I N
    R E TA I L O P E R AT I O N S

    • INCOME S T A T E M E N T. THE INCOME


    S TAT E M E N T G I V E S T H E R E TA I L E R A S U M M A RY
    OF THE INCOME AND EXPENSES INCURRED
    OVER A GIVEN TIME PERIOD.
    • BALANCE S H E E T. THE BALANCE SHEET
    SHOWS THE FINANCIAL CONDITION OF THE
    R E TA I L E R AT A PA RT I C U L A R P O I N T I N T I M E .
    • C A S H F L O W S T A T E M E N T. I T L I S T S I N D E T A I L
    THE SOURCES AND TYPES OF ALL R EVENUE
    AND EXPENDITURES FOR A GIVEN TIME
    PERIOD
    I N V E N T O RY VA LUAT I O N

    I N V E N T O RY VA LU AT I O N I N R E TA I L I N G I S M O R E
    C O M P L E X B E C A U S E O F T H E M A N Y A S S O RT E D
    MERCHANDISE LINES IT SELLS. THERE ARE TW O
    MAJOR DECISIONS REGARDING I N V E N T O RY
    VA LU AT I O N I N R E TA I L I N G T H AT YO U H AV E T O
    K N O W:

    1 ) T H E AC C O U N T I N G I N V E N T O RY S Y S T E M ; A N D
    2 ) T H E I N V E N T O RY P R I C I N G M E T H O D
    T H E A C C O U N T I N G I N V E N T O RY S Y S T E M

    I N T H E AC C O U N T I N G I N V E N T O RY S Y S T E M , T H E R E
    A R E T W O ( 2 ) S Y S T E M S T H AT A R E AVA I L A B L E T O
    T H E R E TA I L E R : 1 ) T H E C O S T M E T H O D A N D 2 )
    T H E R E TA I L M E T H O D

    1. THE COST METHOD. THE COST METHOD OF


    I N V E N T O RY VA LU AT I O N PROVIDES A BOOK
    V A L U A T I O N O F I N V E N T O R Y B A S E D S O L E LY O N
    T H E R E T A I L E R S C O S T , I N C L U D I N G F R E I G H T. I T
    F O C U S E S O N LY A T T H E C O S T O F E A C H I T E M A S
    IT WAS RECORDED IN THE ACCOUNTING
    RECORDS WHEN PURCHASED.
    T H E A C C O U N T I N G I N V E N T O RY S Y S T E M

    2 . T H E R E TA I L M E T H O D . T H E R E TA I L M E T H O D
    OF I N V E N T O RY VA LU E S MERCHANDISE AT
    CURRENT R E TA I L PRICES. AS C O M PA R E D TO
    C O S T M E T H O D , I T K E E P S A D E TA I L E D R E C O R D S
    O F I N V E N T O RY B A S E D O N T H E R E TA I L VA LU E O F
    THE MERCHANDISE. THERE ARE THREE (3) BASIC
    STEPS TO FOLLOW IN COMPUTING THE ENDING
    I N V E N T O RY VA LU E U S I N G T H E R E TA I L M E T H O D :
    T H E R E TA I L M E T H O D

    STEP 1. C A L C U L AT I O N OF THE COST


    C O M P L E M E N T.
    T H E R E TA I L M E T H O D

    S T E P 2 . C A L C U L AT I O N OF THE REDUCTIONS
    F R O M R E TA I L VA LU E .
    T H E R E TA I L M E T H O D

    STEP 3. CONVERSION OF THE ADJUSTED


    R E T A I L B O O K I N V E N T O R Y T O C O S T.
    T H E I N V E N T O RY – VA LU AT I O N S Y S T E M

    THERE TWO METHODS I N V O LV E IN THE


    I N V E N T O RY – VA LU AT I O N S Y S T E M A N D T H E S E
    A •R E :
    FIFO- THIS METHOD ASSUMES T H AT THE
    OLDEST MERCHANDISE IS SOLD BEFORE THE
    M O R E R E C E N T LY P U R C H A S E D M E R C H A N D I S E
    • L I F O - I T I S B A S E D O N T H E A S S U M P T I O N T H AT
    THE MOST R E C E N T LY PURCHASED
    MERCHANDISE IS SOLD FIRST AND THE
    O L D E S T M E R C H A N D I S E I S S O L D L A S T. C O S T
    OF GOODS SOLD ARE BASED ON THE COST OF
    T H E M O S T R E C E N T LY P U R C H A S E D I N V E N T O R Y ,
    W H I L E T H E O L D E R I N V E N T O RY I S R E G A R D E D

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