Retail Math Cheat Sheet
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1Retail Math CHEAT SHEET
THESE SAMPLE FORMULAS ARE BASED ON THE DATA BELOW
ABBREVIATIONS
DATA FOR 13 WEEKS:
Sls = Sales. Could be unit or dollars. POS Qty is sales units. POS Sales represents sales dollars.
LY POS Sales
$1,000,000
MU = Markup. Usually represents initial margin percentage (MU%)
TY POS Qty
240,000
MD = Markdowns. Usually represents markdown dollars as a percentage of retail sales dollars (MD%)
TY POS Sales
$1,200,000
TY Ship Cost
$1,040,000
GMROII or ROI = Gross Margin Return on Inventory Investment, or simply Return Investment.
TY Ship Retail
$1,300,000
W.O.H. = Weeks on Hand. Number of weeks worth of sales that is currently in inventory. 13 W.O.H.
TY Markdowns
$60,000
means that current inventory levels are equivalent to 13 weeks worth of sales.
Current Inv @ Retail
$369,200
GP = Gross Profit. Could be dollars (GP$) or percent of retail sales (GP%).
Weeks On Hand
4.00
CC = Cost Complement. The opposite of MU% or MM%. If MU% is 20%, then CC% is 80%. If MM%
Avg. Inventory @ Retail
$380,000
is 16%, the CC% is 84%.
Avg. Inventory @ Cost
$304,000
INV = Inventory
MM% = Maintained Margin
PX = Price
Avg = Average
VOLUME MEASURES
CALCS
01
Sales Increase %
Sls Inc%=(TY Sls - LY Sls) / LY Sls
20.0%
02
LY Sales
LY Sls = TY Sls / (Sls Inc % + 1.00)
$1,000,000
03
TY Sales
TY Sls = LY Sls * (Sls Inc % + 1.00)
$1,200,000
04
Average Price
Avg. Px = POS Sales / POS Qty
$5.00
05
POS Sales
Sls = POS Qty * Avg Px
$1,200,000
06
POS Qty
Qty = POS Sales / Avg Px
240,000
PROFITABILITY MEASURES
CALCS
07
Initial Margin
MU% = (Rtl - Cost) / Rtl
20.0%
08
Cost
Cost = Rtl * (1.00 - MU%)
$1,040,000
09
Retail
Rtl = Cost / (1.00 - MU%)
$1,300,000
10
Markdown %
MD% = MD$ / POS Sales
5.00%
11
Markdown $
MD$ = POS Sales * MD%
$60,000
12
POS Sales
Sls = MD$ / MD%
$1,200,000
13
Maintained Margin
MM% = MU% - MD%Cost
16.00%
MD%Cost = MD%Rtl * CC%
4.00%
CC% = 1.00 - MU%
80.00%
14
Therefore –>
MM% = MU% - (MD% * (1.00 - MU%))
16.00%
15
Therefore –>
MM% = MU% + (MD% * MU%) - MD%
16.00%
16
Initial Margin
MU% = (MM% + MD%) / (1.00 + MD%)
20.00%
17
Markdowns
MD% = (MM% - MU%) / (MU% - 1.00)
5.00%
ASSET EFFICIENCY MEASURES
CALCS
18
Inventory Turns (Ann)
Turns = Ann Rtl Sls / Avg Rtl Inv
12.63
19
Ann Rtl Sls
Ann Rtl Sls = Avg Rtl Inv * Turns
$4,800,000
20
Avg Rtl Inv
Avg Rtl Inv = Ann Sls / Turns
$380,000
21
Shortcuts –>
Turns = 52 / W.O.H.
13.00
22
W.O.H. = 52 / Turns
4.12
23
Return on Investment
R.O.I.I. = Ann GP$ / Avg Cost Inv
2.53
24
Ann GP$
Ann GP$ = Avg Cost Inv * R.O.I.I.
$768,000
25
Avg Cost Inv
Avg Cost Inv = Ann GP$ / R.O.I.I.
$304,000
26
Shortcut –>
R.O.I.I. = (MM% / CC%) * Turns
2.41
27
MM% = (R.O.I.I. / Turns) / (1 + (R.O.I.I. / Turns))
16.00%
28
Turns = R.O.I.I. / (MM% / CC%)
12.63
w w w. 8 t h A n d W a l t o n . c o m
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