Objective: To learn how to compute Margin, Markup and Rate of Inventory Turnover.

Slides:

Advertisements

Similar presentations

Estimating Ending Inventory Chapter 6 Section 3. ESTIMATED MERCHANDISE INVENTORY SHEET OPEN TEXTBOOKS PAGE 183 OPEN WORKBOOKS PAGE 255.

Advertisements

Estimates of Inventory Sometimes taking actual inventory counts is impractical e.g. for auditors who want to verify inventory balances So, it may be easier.

Current Ratio Start Card Who has ……. Who Has…I Have… Creditors Days (Average period of credit received) Current Assets Current Liabilities.

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 34.1 Chapter 34 Introduction to.

© The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 8-1 INVENTORIES AND THE COST OF GOODS SOLD Chapter 8.

Chapter 18 Inventory and Overhead McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.

CHAPTER 9 Inventories: Additional Valuation Issues ……..…………………………………………………………...  basis for valuation of inventory  “lower of cost or the cost to replace”

Projected Income Statement Jeff’s Really Cool Stuff.

HIGHLIGHTS OF CHAPTER 8: Inventories: Measurement March 2004 March 2004.

Optimum Distribution Formula What is the probability of selling the next copy distributed? How much did it cost to distribute/produce that copy?

Incomplete Records.

Brad Sugar Show me the money.. The formula for building a business.

McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Inventories and the Cost of Goods Sold Chapter 8.

Special Accounting Procedures

Menu Pricing reflect the overall cost of running the operation These prices the costs needed to purchase, prepare and service it as well as labor rent.

1 Inventory Valuation Issues Sid Glandon, DBA, CPA Associate Professor of Accounting.

O To be able to learn how to prepare an income statement BJE C T IV E.

EXERCISES Week 8 Matakuliah : V0232 – Akuntansi Keuangan Hotel

Module Accounting & Finance Topic Ratio Analysis.

Chapter 9 - Inventories: Additional Valuation Issues

Chapter 18 Inventory and Overhead McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin ©2011 The McGraw-Hill Companies, All Rights Reserved Chapter 18 Inventory and Overhead.

Financial Statements Aim: To construct a Profit & Loss Account Objectives: Use appropriate business terminology / concepts Know the importance of P & L.

© The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide INVENTORIES AND THE COST OF GOODS SOLD Chapter 8.

Pricing Math. Lesson Objectives Use the basic formula for calculating a retail price Calculate dollar and percentage markup based on cost Calculate discounted.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-3 Estimating the Inventory Gross profit method of estimating inventory Retail method.

ACG 2021 Chapter 6 – Inventory Summary. Formula - 1 Beginning Inventory + Purchases Goods Available for Sale - Ending.

INTRODUCTION TO PROFIT Part 11. Starter What is the “cost of sales”? What is Profit?

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Inventories and the Cost of Goods Sold Chapter 8.

18-0 Short-Term Borrowing 18.6 Operating Loans Committed vs. non-committed Letter of credit Accounts receivable financing Covenants Factoring Securitizing.

Markup, Markdown, Inventory Management Madam Zakiah Hassan 8 March 2012.

Special Accounting Procedures Chapter 5. Gross profit Mark-up & Margin Mark-up = Gross profit Cost price Can be either a fraction or a percentage Margin.

Profit and Loss Accounts - Introduction

PROCESS COSTING CHAP 32. What is Process Costing? an accounting methodology that traces and accumulates direct costs, and allocates indirect costs of.

9-1 Inventory Estimation Gross Profit Method Chapter 9 Illustrated Solution: Problem 9-32.

Incomplete Records Mr. Barry A-level Accounting Year 13.

Current Ratio Profit (after tax and preference dividends) Number of Issued Ordinary Shares.

Demonstration Problems Chapter 6 Merchandise Inventory 6-1 © 2016 Pearson Education, Inc.

Problems In Preparation Of Financial Statements Lecture-5 BY AHSAN RIAZ SHEIKH.

Chapter 6 Exercises Inventories and Cost of Sales.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4-2 Interim Departmental Statement of Gross Profit.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 4-2 Interim Departmental Statement of Gross Profit.

Estimating Inventory Cost Retail Method of Inventory CostingRetail Method of Inventory Costing –based on the ratio of the cost of merchandise available.

£££ Sales10,000 Less returns inwards150 9,850 Opening Stock350 Purchases1,000 Less returns outwards50950 Closing Stock200 Cost of Goods Sold1,100 Gross.

Financial Management. Purpose of Financial Reports Financial Reports – Summarize financial data over a given period of time (shows if the company made.

Gross method and retail method (lower of average cost or market)

FINANCIAL ACCOUNTING LECTURE NOTES BY MR. S

Estimating Inventories

Inventory and Overhead

Preparing Financial Statements Mark up and Margin

Inventory and Overhead

The Financial Accounts

Contemporary Selling Sales Math Dr. Carlos Valdez

Cost & Management Accounting

Financial Analysis – Part 2

BE estimating gross profits

Valuation of Inventory

HIGHLIGHTS OF CHAPTER 5: Income Measurement & Profitability Analysis

INVENTORIES AND THE COST OF GOODS SOLD

Inventory Valuation Issues

Financial Statements Aim: To construct a Profit & Loss Account Objectives: All - Use appropriate business terminology / concepts Most - Know the importance.

CALCULATING THE ACCOUNTS RECEIVABLE TURNOVER RATIO

LESSON 6-3 Estimating the Inventory

Financial Analysis Quick ratio: ($22,000+ $41,500)/

Chapter 9: Inventories – Additional Valuation Issues

LESSON 4-2 Interim Departmental Statement of Gross Profit

RATIO ANALYSIS.

GROSS PROFIT METHOD OF ESTIMATING INVENTORY

Bread Zeppelin.

Presentation transcript:

Objective: To learn how to compute Margin, Markup and Rate of Inventory Turnover

3 parts SALES Cost of Sales Gross profit

MARGIN - Gross profit based on sales- Gross profit based on sales - expressed in %- expressed in %

MARGIN FORMULA: GP/SALES x 100%Margin = GP/SALES x 100%

Sales $ 30,000 Less: cost of sales 20,000 Gross profit 10,000 Margin = $ 10,000 $ 30,000 X 100% = 33.33%

Sales $ 25,000 Less: cost of sales 16,000 Gross profit 9,000 Margin = $ 9,000 $ 25,000 X 100% = 36%

Gross profit = Sales - COS = $ = $20 20 Margin = 20/100 x 100% = 20%

25% 100% 80% Gross profit = Sales x 25% = $

30% 100% 70% Gross profit = Sales x 30% = $ September Purchases

MARKUP - Gross profit based on cost- Gross profit based on cost - expressed in %- expressed in %

MARKUP FORMULA: GP/Cost of sales x 100% Margin = GP/Cost of sales x 100%

Sales $ 30,000 Less: cost of sales 20,000 Gross profit 10,000 Markup = $ 10,000 $ 20,000 X 100% = 50%

Sales $ 25,000 Less: cost of sales 16,000 Gross profit 9,000 Markup = $ 9,000 $ 16,000 X 100% = 56.25%

Gross profit = Sales - COS = $ = $20 20 Markup = 20/80 x 100% = 25%

25% 125% 100% Cost of sales = Sales  1.25 = $

30% 130% 100% Cost of sales = Sales  1.3 = $ Sept Purchases

RATE OF INVENTORY TURNOVER -No of times a business places its inventory in a given period of time -Expressed in x times-Expressed in x times

RATE OF INVENTORY TURNOVER FORMULA: RITO = Cost of Sales / average inventoryCost of Sales / average inventory RITO = Cost of Sales / average inventoryCost of Sales / average inventory Average inventory = (inventory opening + inventory closing) / 2= (inventory opening + inventory closing) / 2 Average inventory = (inventory opening + inventory closing) / 2= (inventory opening + inventory closing) / 2

$25 6x

$10 10x

Ave Inventory = ($36+24) / 2 = $30 Cost of sales = Sales / 1.4 = $214 Sales Less: cost of sales Gross profit $300 ? ? ? ? 140% 100% 40% 214 RITO = 7.13x or 7x

20% 120% 100% 100 Cost of sales = Sales / 1.2 = $ Ave Inventory = ($25+15) / 2 = $40 RITO = 5x

x

Sales Less: cost of sales Gross profit Inv. 1 Aug Add: Purchases Total Inv. 31 July Inv Loss on fire Klaus, Trading Account For the year ended 31 July 2013

Sales Less: cost of sales Gross profit 1,600 Inv. 1 Aug Add: Purchases Total Inv. 31 July Inv Loss on fire Klaus, Trading Account For the year ended 31 July 2013

Sales Less: cost of sales Gross profit 1,600 Inv. 1 Aug 39,200 Add: Purchases Total Inv. 31 July Inv Loss on fire Klaus, Trading Account For the year ended 31 July 2013

Sales Less: cost of sales Gross profit 1,600 Inv. 1 Aug 39,200 Add: Purchases Total Inv. 31 July Inv Loss on fire Klaus, Trading Account For the year ended 31 July ,000

Sales Less: cost of sales Gross profit 1,600 Inv. 1 Aug 39,200 Add: Purchases Total Inventory loss Inv. 31 July Klaus, Trading Account For the year ended 31 July ,

Sales Less: cost of sales Gross profit 1,600 Inv. 1 Aug 39,200 Add: Purchases Total Klaus, Trading Account For the year ended 31 July , % 100% 25% 38,400 9,600 40,800 1,700 Less: Inv Loss Inv. 31 July

Sales Less: cost of sales Gross profit 9,500 Inv. 1 Apr 22,000 Add: Purchases Total Jacky Chan, Trading Account For the year ended 31 March , % 80% 20% 14,000 3,500 31,500 17,500 Less: Inv 31 May Exercise 17 6,600 10,900

If you like my PPT Please endorse me on LINKEDIN nicolas/39/503/368 Thanks!!! nicolas/39/503/368