Retail Accounting

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Retail Accounting 101: General Retail Financial KPIs – Part 1

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We have seen a vast array of key performance indicators being employed by retailers and we felt it might be appropriate to pull together this unwieldy bunch of indicators into a two part series for your perusal. The second instalment will include more customer centric indicators which often are incorporated into a balanced scorecard management system.

Retail Accounting 101: General Retail Financial KPIs – Part 1

  • Creditor Turnover – Average creditor/ (Cost of Sales / 365)
  • Debtor Turnover Days – Average debtors/ (Credit Sales/365)
  • Acid Test Ratio – (Current Assets – Stock)/Current Liabilities
  • Admin Cost % – (Administration Costs / Sales )*100
  • Average Stock – (Beginning of Period stock + End of Period stock)/2
  • Break-even (£) – Fixed Costs / Gross Margin Percentage
  • Cash Conversion Cycle – Days Stock Outstanding + Days Sales Outstanding + Days Creditor Outstanding
  • Contribution Margin – Total Sales – Variable Costs
  • Cost of Goods – Retail Price – Markup
  • Cost of Goods Sold – Beginning Stock + Purchases – Ending Stock
  • Current Ratio – Current Assets / Current Liabilities
  • Ending Inventory At Retail –  Beginning Inventory – (Sales + Transfers out + Return to Vendor + Markdowns + Employee Discounts + Shrinkage) + (Purchases + returns from Customers + Transfers In + Markups)
  • Gross Margin – Total Sales – Cost of Goods
  • Gross Margin Return On Investment –  Gross Margin £ / Average stock Cost
  • Initial Markup – (Expenses + Reductions + Profit)/(Net Sales +Reductions)
  • Interest Cost% – (Interest Costs / Sales)*100
  • Stock Turnover – Net Sales / Average Stock
  • Maintained Markup £ – (Original Retail – Reductions) – Cost of Goods Sold
  • Margin % – (Retail Price – Cost) / Retail Price
  • Markup % – Markup Amount / Retail Price
  • Net Receipts – (Purchases + Transfers in + Returns from Customers + Overages) – (Transfers Out + Return to Vendors)
  • Net Sales – Gross Sales – Returns and allowances
  • Retail Price – Cost of Goods + Markup
  • Return on Capital Invested – (Profit for the Year / Capital Employed)*100
  • Sales per Square Foot – Sales per square foot = Total Net Sales / Square foot of selling Space
  • Sales per Square metre – Sales per square metre = Total Net Sales / Square metre of selling Space
  • Stock Turnover Days – Average stock / (Cost of Sales /365) number of days
  • Total Asset Sales Ratio – Sales / Total Assets
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Author: retailaccounting

CounterBooks is an online retail accounting management suite which is used by retailers across the world.

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