Retail Dogma

# Retail Math Formulas Cheat Sheet

This is a cheat sheet for the most important retail math formulas used in retail & e-commerce businesses. Feel free to read online or download a free copy.

Take the online video course on retail math, and learn how the different metrics connect to each other, and see the applications on business cases. Complete the course and get a certificate of completion.

## The Sales Equation

The sales equation for retail & ecommerce businesses

## ATV

Average Transaction Value aka. AOV (Average Order Value)

## IPC

Items per Customer aka. UPT (Units per Transaction)

## Conversion

Measures the number of customers who bought out of the total number of customers who visited the store

## Traffic

Measures the number of customers who entered the store

## SPSF

Sales per Square Foot

## LFL Growth

Like for Like Growth aka. Comps

Measures growth (%) of this year (TY) over last year (LY) for the same stores that traded for the same period.

## Gross Margin

Gross Margin aka. Gross Profit %

## Markdown

Percentage of reduction on the original price

## Markup

The amount added to the cost price to set the sale price

### Markup (%) = (Sale Price - Cost Price) ÷ Cost Price x 100

Open to Buy calculates how much inventory to purchase, in order to fulfill the planned sales budget and have enough stock cover.

## GMROI

Gross Margin Return on Investment

## Sell Thru

Sell Through Rate

## Aging Inventory

Measures the % of inventory that has aged (depending on when you consider aging, e.g above 1 year) out of total inventory at hand(SOH).

## Inventory Turnover

Inventory Turnover Ratio (IT) measures how many times a company has turned its inventory during a certain period (e.g 1 year).

## DSI

Days Sales in Inventory aka. Days Inventory measures how many days it takes the company to sell its inventory.

## Shrinkage

Shrinkage aka. Stock Loss can be calculated either at cost value or at retail value (Cost to Cost, Retail to Retail or Cost to Retail)

## Forward Stock Cover

measures how long the current stock on hand will cover future forecasted sales periods.

## EBITDA

Earnings Before Interest, Taxes, Depreciation & Amortization

## Net Profit Margin

Percentage of Net profit out of total sales