1. Sales analysis and profitability analysis

2. Sales analysis  Sales analysis is a detailed study of sales volume performance  Through sales analysis the management seeks insights on strong and weak territories, high volume and low volume products, effective and ineffective salesmen, types of customers providing satisfactory and unsatisfactory sales volumes, variations in sales volumes over different time periods etc.  Sales analysis uncovers details that otherwise lie hidden in the sales records.

3. Sales analysis  Sales managers use sales analysis to evaluate the current performance with reference to past sales, competitors’ sale or forecasted sales.  These evaluations enable the management to decide the direction and scale of future sales efforts.

4. Types of sales analysis  by total sales volume  by territory  by salesperson  by product line  by customer  by channels of sale  by periods  by size of order

5. Analysis by sales volume To know  the trend of sales over the past several years  the trend in company’s market share

6. Analysis by territory  To enable preparation of sales forecast and sales budget for each territory  To prepare the budget for selling expenses  To compare the budget with actual to measure and control the relative performance of each territory  To assess the unique conditions in various territories

7. Analysis by salesperson  To compare actual sales with budgeted sales or sales quotas in order to take corrective action whereever necessary  Compare volume of sales with selling cost in order to have control over selling cost  To measure and control the relative efficiency of each salesman  For fixing up sales commission and bonus to the salesman

8. Analysis by product line  To ascertain the net profit of each product line.  To plan production according to profitability and decide on the product mix  To analyse the trend of sale of each product  To link cost of each product to its volume for the purpose of cost control

9. Analysis by customer  To ascertain the net profit by each type of customer  To maintain balance between different type of customers by focusing on potential customer  To know the customer preferences in respect of quality and type of product  To decide on the extent of discount to be allowed

10. Analysis by channels of sale  To ascertain the profits of each channel  To assess the viability of each channel which would help in future planning

11. Analysis by time periods  To know the trends, periodic, cyclical or seasonal movement  To assist in the framing of production and sales policy in the long run.

12. Analysis by size of order  To compare the handling and transportation cost of various sizes of order  To decide upon trade discount on quantity of various sizes

13. Profitability analysis Profitability analysis is done by comparing the sales revenue of each product, salesman, territory etc. with the costs associated with production, selling and distribution of the product.

14. Profitability analysis  It can be done either through the contribution approach or through the absorption costing approach.  Contribution approach requires the segregation of costs into fixed and variable components.  While in absorption costing the profits are measured as the difference between the sales value and the total cost of sales, contribution approach judges the profitability of a product from the contribution earned.