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FINANCIAL DIMENSIONS IN RETAIL
BY :-
HIMANSHU BHARDWAJ
PARITOSH JAIN
Financial Dimensions
Profit planning
Asset management
Budgeting
Resource allocation
Profit planning
Profit & Loss statement
A statement that summarizes a retailer’s revenues, cost & expenses during a period of time which can be a month, a quarter or an year. It comprises of:
Net sales
Cost of goods sold
Gross profit
Operating expenses
Taxes
Net profit after taxes
Assets Management
It means managing assets and controlling liabilities. It comprises of:
Balance sheet
Strategic profit model
Other ratios
Strategic profit model
The relationship among the net profit margin, asset turnover, and financial leverage is expressed by the Startegic Profit Model, which reflects a performance measure known as return on net worth.
Other ratios
Current ratio
Quick ratio
Gross profit ratio, etc.
BUDGETING
Budgeting is an estimate of income and expenditure for set period of time.
Budgeting outlines a retailer planned expenditure and income for a given time based on expected performance.
Benefits of preparing budget to a retailer
Relate expenditure with expected performance.
Better allocation of resources.
Spending for various department is coordinated.
Better planning may leads to efficiency.
Retailer may become proactive.
Analysis of budget with actual performance.
Goal
Performance standard
Planned expenditur
e
Actual expenditur
e
Monitoring result
Adjustment
Retail Budgeting Process
Preliminary budget decision
Top down or bottom up budgeting
Time frame- yearly, semi annually , quarterly , monthly.
Frequency of reviewing budget.
Budget flexibility is prescribed.
Budgeting on department or product wise.
Resource Allocation
Magnitude
Capital expenditure-long term investment in fixed assets.
Operating expenditure- administrative cost.
Productivity
The efficiency with which a retail strategy is carried out.
Way to enhance productivity.
Improve employee performance.
Automating
Small core worker during non-peak time.
Supplemented part-timers in peak time.
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