Tip 1: How to calculate the profitability of a clothing store
Tip 1: How to calculate the profitability of a clothing store
The indicator of profitability reflects efficiencybusiness. It must be calculated before making a decision to open a clothing store, and constantly analyze the dynamics of profitability for owners of already operating outlets.
Calculating the profitability of a clothing store
A key indicator of the effectiveness of anystore is the profitability of sales. It is calculated as a percentage of the ratio of net profit to revenue. Thus, this indicator clearly shows what proportion of revenue goes to the formation of profits. Calculating revenue is easy enough - this is the sum of all receipts from customers in cash and non-cash form without taking into account the cost of purchasing clothes. Whereas net profit does not include all costs that are associated with running a business. For a clothing store, this is often the rent, salaries of salesmen, tax payments, etc. Many entrepreneurs confuse the notions of profitability and margins. Meanwhile, they have fundamental differences. For example, the store buys T-shirts at a price of 100 rubles, and sells them for 150 rubles. For the month, 20 t-shirts were sold. Accordingly, the margin for the goods is 50 rubles. Whereas, if the salaries of sellers and rent of premises in the amount of more than 3000 rubles, then the profitability of sales was negative. It is advisable to analyze the profitability of sales separately for each product group. The criteria for their selection can be very diverse. For example, in multibrand stores, you can analyze the profitability of sales for each brand. Or, separately, calculate the profitability of sales of various goods - T-shirts, skirts, accessories or women's and men's clothing. This approach allows you to determine the most unprofitable and profitable directions and make adjustments to the range. The profitability of sales can be calculated not only on the basis of the current performance of the store, but also on the basis of hypothetical forecast indicators when opening a new store. This allows predicting the expected efficiency from opening a store. Also, when evaluating the opening of new outlets, the return on investment is analyzed (the ratio of net profit to total costs).Ways to improve the profitability of store sales
It should be borne in mind that the profitability of sales canhave both a positive and a negative value. If the indicator tends to zero or has gone into negative control of the clothing store, it is necessary to take urgent measures and work on improving the profitability of sales. Often, low profitability indicates an incorrectly chosen pricing strategy. If the prices in the store can not be increased, because this will make the store uncompetitive to others, it is worth looking at the cost structure and considering its key components. In case it was revealed that the main expenses fall on the salary, it may be expedient to optimize the number of sellers. Perhaps it's worth moving to another room with a lower rent. You can also try to get more profitable offers from clothing suppliers or work on the assortment. For example, to include start selling related products with a higher mark-up. For example, they include a variety of accessories (bags, sunglasses) and bijouterie.Tip 2: How to calculate the return on sales
The effectiveness of your own business, as well as the effectiveness of the trading company's economic activities, is best assessed from the point of view of profitability sales. After all, very often the owners of the enterprise take an increase in gross turnover for the indicator of success. However, in practice, only profitability reflects the real picture of the cases.
You will need
- - indicators of the company's economic activity;
- - calculator.
Instructions
1
Profitability sales is expressed in a certain coefficient, the dynamics of which you can compare in different reporting periods. First, determine the period for which you will calculate profitability sales, for example, a year or a quarter. Identify the two main values needed to find this ratio: net income and total revenue from sales. Net profit is a part of gross profit,remaining on the balance sheet after deduction of taxation (after payment of all tax deductions and contributions to the budget). It serves for paying dividends to shareholders, updating fixed assets and developing the enterprise. sales is the total amount of income received as a result of sales goods, services and works.
2
After you have calculated these two values, you can determine the profitability ratio sales. Divide the net profit by sales revenue, and you will know profitability. Let's admit, for the year before last, the sales revenue amounted to 3.5 million rubles, and the net profit - 900 thousand rubles. Thus, the coefficient of profitability sales = 0.9 / 3.5 = 0.2571, i.e. 25.71%. And over the past year, sales revenue amounted to 3.7 million rubles, and net profit - 950 thousand. The coefficient of profitability - 25.67%. This example demonstrates that the increase in revenue and net profit does not mean an increase in profitability, as the profitability ratio has decreased by 0.04%. Having such data, the managers of the enterprise can make decisions to optimize the business and find the reasons for the reduction in profitability.
3
For a more complete picture of the company's performance, count profitability sales on several levels. For example, for a single group of products or for each major customer. This technique will allow you to make more accurate conclusions about the prospects for work. Perhaps you will refuse certain products or optimize the work with the client base.
Tip 3: How to improve the return on sales
Profitability sales determines the value of the share of profit in the revenue from the company. Another name for this indicator is the rate of profit. Improving profitability sales mainly due to factors such as a reduction in the cost of goods, as well as an increase in its price.
You will need
- Skills in the field of economic analysis, financial reporting.
Instructions
1
Identify which factors have affected the decline in profitability sales your product. Conduct an analysis of the market situation. See all similar products / services offered by competitors. Due to the fact that the number of manufacturers can vary, highlight the main ones that occupy the most stable positions in the market.
2
Sensitively respond to changes, especiallyinnovations, in order for your product to meet modern standards and was in demand. In order to achieve this, apply a reasonable, and most importantly, flexible assortment policy for the production and marketing of goods / services.
3
Conduct an analysis of the company's financial performance, which determines which items of expenditure can be reduced. If possible, to increase profits and profitability sales reduce the cost of production. Just keep in mind that in this case there should not be a decrease in sales revenue. Or increase the prices of goods / services sold, if this does not affect the number of buyers who want to buy it. Lean on the current situation in the market, as well as the prices that competitors are ready to offer.
4
If the company is producing severaltypes of goods, determine which of them is most in demand in the market. By increasing the proportion of the most profitable products in the overall structure of products going for sale, increase profitability sales all goods / services.
Tip 4: How to calculate the profitability of a business
In connection with the current situation on the world marketand the instability of the economy as a whole, the owners pay more and more attention to the analysis of the activities of their enterprises. With the help of such an analysis, you can objectively assess the solvency of the company, the efficiency and profitability of its activities, as well as prospects for development. To reduce costs and manage the company, the most effective are the profitability indicators.
Instructions
1
The most significant indicator that youcan calculate when assessing the profitability of the business, is the return on equity. The owners of the enterprise receive the profitability of their investments in the form of contributions to the authorized capital. In exchange, they have rights to the corresponding share of profits. Therefore, from the point of view of the owners, the profitability of capital is the most important indicator of the company's activity, since it characterizes the amount of profit that the owner will receive from each ruble of invested funds.
2
Another indicator characterizingefficiency of the enterprise, is the turnover of assets. It reflects how many times in a period the capital invested in the company's assets turns around. This indicator characterizes the intensity of use of all assets, regardless of the sources of their formation. In addition, asset turnover shows how much a company earns from each ruble of funds invested in assets. An increase in this indicator indicates a more effective use of them.
3
As the main indicator of effectivenessactivities of enterprises with relatively small amounts of fixed assets and equity, use the profitability of sales. It is defined as the ratio of the profit from the sale of products (operating profit) to the volume of sales (revenue) for a certain period. Profitability of sales shows how much the net profit is received by a firm from each ruble of sold products, or how much money remains at its disposal after covering the cost price, paying taxes and interest on loans.
4
To assess the effectiveness of operational activitiesyou can apply the return on assets. It is the main production indicator reflecting the efficiency of using the invested funds. Return on assets is defined as the ratio of the net profit and the average value of assets over a certain period. It depends on two factors: profitability of sales and asset turnover.
Tip 5: What is the return on sales
Profitability is one of the indicatorsbusiness activity of the enterprise, which are necessary for making managerial decisions. It is used in the analysis of financial statements, assessment of economic activity, pricing process. The level of sales efficiency characterizes their profitability.
