Real World Math Skills

Basic Retail Math Formulas




Sales Metrics

  1. Average Dollar Sales (ADS):
  2. Formula: ADS = Net Sales $ / Number of Transactions

  3. Calculates the average transaction value over time.

  4. Average per Week (APW):

  5. Formula: APW = Gross Sales Units / Number of Weeks

  6. Tracks the sales velocity of an item to forecast future demand.

  7. Average Order Value (AOV):

  8. Formula: AOV = Net Sales / Number of Transactions

  9. Measures average customer spend per transaction.

  10. Average Unit Cost (AUC):

  11. Formulas:
    • Sales AUC = COGS / Units Sold
    • Inventory AUC = Inventory at Cost / Units OH

  12. Reflects the average cost per inventory unit.

  13. Average Unit Retail (AUR):

  14. Formulas:
    • Sales AUR = Net Sales $ / Units Sold
    • Inventory AUR = Retail Inventory / Units OH

  15. Indicates the average selling price.

  16. Cost of Goods Sold (COGS):

  17. Formula:
    COGS = (BOP Inventory + Purchases + Other Costs) - EOP Inventory

  18. Represents the cost of sold inventory over time.

  19. Markdown & Discount:

  20. Markdown: Permanent price reductions to clear inventory.

  21. Discount: Temporary reductions applied at purchase.

  22. Allowances:

  23. Formula: Allowances = Discount $ + Markdown $

  24. Total price reductions to incentivize sales.

  25. Net Sales:

  26. Formula: Net Sales = Gross Sales - Returns $

  27. Tracks sales after returns are deducted.

  28. Sale Price:

    • Formula: Sale Price = Ticket Price - Allowances
    • Final price after all reductions.

  29. Units per Transaction (UPT):

    • Formula: UPT = Unit Sales / Number of Transactions
    • Average items sold per transaction.

Productivity Metrics

  1. Sell Through (ST):

    • Formula: ST% = Units Sold / BOP Units On Hand * 100
    • Measures inventory sales efficiency.

  2. Gross Margin (GM):

    • Formula: GM = Gross Sales - COGS
    • Percentage: GM% = (Gross Sales - COGS) / Gross Sales * 100

  3. GMROI:

    • Formula: GMROI = Gross Margin $ / Avg. Inventory Cost
    • Assesses inventory productivity and profitability.

  4. Inventory Turn:

    • Formula: Turn = COGS / Avg. Inventory
    • Tracks how frequently inventory cycles through.

Growth Metrics

  1. Build:

    • Formula: Build = Total Sales / Previous Total Sales
    • Measures sales growth rate.

  2. Comparable Store Sales (Comps):

    • Formula:
      Comps = (Total Sales / Prev. Same Store Sales - 1) * 100
    • Tracks same-store growth over time.

Inventory Metrics

  1. Average Inventory:

    • Formula:
      Avg. Inventory = (Sum of BOP + Last EOP Inventory) / Periods
    • Average inventory over time.

  2. Stock to Sales (S/S):

    • Formula: S/S = Inventory at BOP / Prior Week Sales
    • Indicates inventory adequacy.

  3. Weeks of Supply (WOS):

    • Formula: WOS = On-Hand Units / Avg. Weekly Unit Sales
    • Tracks how long inventory will last.

  4. Forward WOS (FWOS):

    • Formula: FWOS = On-Hand Units / Forecasted Weekly Sales
    • Uses forecast data to project inventory duration.

Pro Tip: Bookmark this for quick reference and keep inventory, sales, and growth in balance to maximize retail success!

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