1. Retail Management Calculating Profit
Koslesh Roy - 49
Shaifali Gorakhpuri - 20

2. Contents
Markup
Margin
Stock turn
Stock Productivity
GM ROI

3. Introduction Half the art of selling, is the art of pricing
What price is fair for this customer?
What price will the market bear ?
Consider supplier discounts, list prices, VAT, acceptable margins
Decide a profitable Price
Terms to calculate Profit
Markup
Margin

4. Markup- Margin Margin: Markup: Gross Profits
percentage of the final selling price that is profit.
Markup:
percentage of the cost price added on to get the selling price
Gross Profits
Overheads (like fixed costs, corporation tax, wages, etc)
Minimum acceptable margins.

5. Markup belongs to cost and margin belongs to sales
Formula
MARKUP = (SP -CP)
X 100 CP
MARGIN = (SP-CP)
X 100 SP
Markup belongs to cost and margin belongs to sales

6. Sell BBRL Tea for Rs 179/- ; Gross Margin = 5%
Example: HUL offers Fixed Mark up of 6.66% on Tea; what price should you sell?
MRP of BROOKE BOND, RED LABEL is Rs 181/-
Markup = (SP – CP) / CP
x CP = SP – CP
CP = SP
Thus, CP = SP /
CP = 181/ = RS
Margin = ( ) / 181
= 6.24%
Margin = 5%; SP = ??
Margin = (SP-CP) / SP
0.05 SP = SP-CP
CP = ( ) SP
SP = CP / = Rs179/-
Sell BBRL Tea for Rs 179/- ; Gross Margin = 5%

7. % Markup is always greater than % Margin
Margin vs Markup Chart
15% Markup = 13.0% Gross Profit
20% Markup = 16.7% Gross Profit
25% Markup = 20.0% Gross Profit
30% Markup = 23.0% Gross Profit
33.3% Markup = 25.0% Gross Profit
40% Markup = 28.6% Gross Profit
43% Markup = 30.0% Gross Profit
50% Markup = 33.0% Gross Profit
75% Markup = 42.9% Gross Profit
100% Markup = 50.0% Gross Profit
% Markup is always greater than % Margin

8. Markup & Margins vary from product to product and for different SKU to SKU
To calculate markups for non MRP Products markups are added to the sum of total costs (pdt + transportation + taxes etc)

9. STOCK TURN Eg. Sale = Rs12,00,000/- Means rotation of STOCK in a year.
FORMULA = SALES / Avg Stock
Eg. Sale = Rs12,00,000/-
Opening Stock = Rs.50,000/-
Average Stock = Rs.50,000/-
Stock Turn = 24 Times
Stock Turn is always expressed in No. of Times.

10. WHAT IS THE IMORTANCE OF STOCK TURN RATE?
The Stock Turn Rate ratio measures the effectiveness of inventory planning control.
A Stock Turn Rate that is too low indicates poor planning and lack of control.
Stock Turn Rate can also be used to calculate the proper beginning-of-month inventory level for each classification on the Open-To-Buy.

11. STOCK PRODUCTIVITY
How much Gross Profit is generated by average stock.
Gross Profit in retailing is generated by cross force of MARGIN and STOCK TURN.
This is called ROSE – Return on Stock Employed.
Formula – 1) MARGIN X STOCK TURN
2) (GP X 100) / AVG.STOCK

12. GMROI FORMULA = (GP X 100) / Paidup Stock
Gross Margin Return on Investment (GMROI) is a ratio in microeconomics that describes a seller's income on every dollar spent on inventory.
Rs100,000 annual profit) / (Rs25,000 average inventory cost) = GMROI of 4.0

13. THANK YOU