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Financial Strategy of Retail Store
Financial Strategy of Retail Store
Financial Strategy of Retail Store
Presented By; Srikanta biswal Adyasa Das Sonam Subhadarsini Sikta Panigrahi Sudhansu Sekhar Jena Sanjaya Behera 1
Retailing Strategy
Retail Market Strategy Financial Strategy Retail Locations
around us
O Personal self-gratification, status,
respect
Net Profit Margin: reflects the profits generated from each dollar of sales Asset Turnover: assesses the productivity of a firms investment in its assets
Allowances - Return O Cost of Good Sold (COGs) O Gross Margin (GM) = Net Sales - COGs
(SG&A) expenses
Operating expenses - Extraordinary (recurring) operating expenses O Net profit margin = Operating profit margin - Taxes - Interest - Extraordinary nonrecurring expenses
merchandise O their own performance with that of other retailers with higher or lower levels of sales.
= Gross margin %
expressed as a percentage of net sales to facilitate comparisons across items, stores, and merchandise categories within and between firms.
Operating expenses Net sales
= Operating expenses %
monies owed to the retailer by customers that have bought merchandise on credit. O Fixed Assets = Fixture, Stores (owned) O Asset Turnover = Sales/Total Assets
Net sales Total assets = Asset turnover
Inventory (cost)
Cost of goods sold Average inventory at cost
= Inventory turnover
Inventory Turnover
O A Measure of the Productivity of Inventory:
O It is used to evaluate how effectively
inventory cycles through the store during a specific period of time (usually a year)
Inventory Turnover = COGS/avg inventory (cost) Inventory Turnover = Sales/ avg inventory (retail)
obligations i.e., salary, rent, vendors, etc. O Cash flow is calculated by making adjustments to net profit involving adding or subtracting differences in revenue and expenses that occur from one period to the next.
term liabilities, it evaluates the retailers ability to pay its short-term debt obligations.
inventory from the short-term assets. O If a retailer needs cash to pay its shortterm liabilities, it cannot rely on inventory to provide an immediate source for cash.
Bottom-Up Planning Buyers and Store managers estimate what they can achieve
Productivity Measures
Input Measures assess the amount of resources or money used by the retailer to achieve outputs such as sales Output measures asses the results of a retailers investment decisions
Productivity measure determines how effectively retailers use their resource what return (e.g., profits) they get on their investments (e.g., expenses)
Outputs Performance
O Sales O Profits
O Cash flow
O Growth in sales, profits O Same store sales
growth
Assessing Performance
O Growth in Stockholder Value Stock Price
O Accounting Measures ROA (Risk
adjusted)
O Benchmark
O Performance Over Time
O Compare performance indicator for three
years
O Performance Compared to Competitors
O Compare performance indicators with major
THANK YOU
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