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