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# Retail Formulas, Definitions and Examples

## KPI Measurement Formula Expressed As Example

Sales
Average Transaction Value Gross Sales / Number of Transactions Currency \$25,550 / 1,200 = \$21.25
Items per Transaction Number of Items Sold / Number of Transactions Number 3,800 / 1,200 = 3.16
Conversion Rate Number of Transactons / Footfall Percent 1,200 / 3,600 = 33.3%
Sales per hour Gross Sales / Hours open for a period of time Currency \$15,047 / 1,954 =

Profit
Gross Profit Sales - Cost of Goods (COGs) Currency \$1,279,015-\$778,025 = \$500,990
Gross Profit Margin Gross Profit / Sales Percent \$500,990 / \$1,279,015 = 39.1%
Net Profit Margin Net Profit (after tax) / Sales Percent \$10,993 / \$1,279,015 = .9%
Maintained Gross Profit Gross Profit - Shrink Currency \$500,990 - \$50,990 = \$450,000
Maintained Gross Margin Gross Profit (minus shrink) / Sales Percent \$450,000 / \$1,279,015 = 35.2%

Employee Productivity
Sales per Employee Sales / number of (full time equivalent) employees Currency \$1,279,015 / 19.5 = \$65,591
Sales per Payroll Hour Sales / Number of Payroll Hours Currency \$1,279,015 / 741 = \$1,726
Gross Profit per Employee Gross Profit / number of (full time equivalent) employees Currency \$566,118 / 19.5 = \$29,032
Employee to Customer Ratio Total Customers in Store / Total Employees in Store Ratio 18/3 = 6

Inventory Productivity
Inventory Turnover Cost of Goods Sold / Value of Inventory Number \$778,025 / \$3,236,584 = 4.16 turns per annum
Inventory Shrink Estimated Inventory Value - Actual Inventory Value (after physical count) Currency \$3,236,584-\$3,191,036 = \$48,548
Inventory Shrink Percent Invneoty Shrink / Estimated Inventory Value Percent \$48,548 / \$3,236,584 = 1.5%
Gross Margin Return on Investment (GMROII) Gross Profit Dollars / Average Inventory @Cost Currency \$566,118 / \$168,673 = \$3.36
Planned Sales + Planned Markdowns + Planned End of Month Inventory - Planned Beginning of
Open to Buy at Retail Month Inventory Currency \$1,279,015 + \$50,000 + 1,225,000 - 1,300,000 = \$1,254,015
Open to Buy at Cost Open to Buy at Retail x Average Gross Margin of Profit Currency \$1,254,015 X 39.1 = \$490,319

Return on Assets
- Before Tax & Interest Net Profit (EBIT) / Total Assets Percent \$17,395 / \$523,037 = 3.3%
- After Tax & Interest Net Profit (after tax) / Total Assets Percent \$10,993/\$523,037 = 2.1%
Return on Net Assets (RONA) Net Profit (after tax) / Net Assets Percent \$10,993 / \$176,168 = 6.2%

Space Productivity
Sales per Store Sales / Number of Stores Currency \$1,279,015 / 2 - \$639,508
Sales per Sq. Foot
- Selling area Sale/Selling Space (excludes all but sales floor) Currency \$1,279,015 / 10,000 - \$127.90
- Total area Sales / Total Store Space Currency \$1,279,015 / \$17,500 = \$73.09
Gross Profit per Sq. Foot
- Selling area Gross Profit / Selling Space Currency \$566,118/10,000 = \$56.61
- Total area Gross Profit / Total Space Currency \$566,118/17,500 = \$32.35
Transactions per Sq. Foot
- Selling area Toal Sales Transactions / Selling Space Ratio 25,140 / 10,000 = 2.51
- Total area Total Sales Transaction / Total Space Ratio 25,140 / 17500 = 1.44