Advanced Fashion: Standard 7 Merchandising Math Created by: Kris Caldwell Timpanogos High School

Types of Financial Records Ledger: A book or computer program containing ongoing accounts of a company Accounts: Records of debits (subtractions of money) and credits (additions of money)

Financial Records and Forms Operating Statement: (also called an income statement) A summary of the financial results of the firm’s operations over a specified period of time. Cost of Goods Sold (COGS): The dollar amount spent on goods that have been sold to customers during the period. Gross Margin: The sum of money available to cover expenses and generate a profit. Figured: Total Sales – COGS= Gross Margin

Financial Records and Forms Net Profit: Resulting positive number after expenses have been deducted from the gross margin figure. Profit Margin: Ratio that measures profit as a percentage of net sales; return on sales (ROS)

Sample Basic Operating (Income Statement)

Terms to know: Fixed costs: Overhead expenses that remain the same regardless of sales volume. Variable costs: Expenses that increase or decrease with the volume of sales or production. Odd-figure Pricing: The retail pricing of merchandise a few cents less than a dollar denomination. Loss leader: Low-priced articles on which stores make little or no profit because of lowering the price for promotional reasons.

Initial markup: The difference between merchandise cost and the selling price originally placed on merchandise. Keystone markup: Doubling the cost price to arrive at the retail price. Maintained markup: The difference between gross merchandise cost and the net selling price of merchandise; the initial markup minus all retail markdowns or other reductions

Markups Markup: The amount added to the cost of merchandise to determine the selling price. Calculating Markup: There are 2 methods for calculating markup; markup percent of cost (markup on cost) or markup percent of selling price (markup on retail). Both are based on percentage.

Markup Percent of Cost Markup % of cost = dollar markup cost cost (Dollar markup cost is retail price minus cost)

Markup Percent of Selling Price Markup % of Selling Price = Dollar markup selling price

Markdowns Markdown: The difference between the previously marked selling price of an item and the reduced selling price. Calculated as either a percent of the original ticketed price or a percent of the marked-down selling price.

Percent of the Original Ticketed Price Ticket price x Markdown %= Markdown Ticket price – Markdown = Selling Price

Percent of the Marked-Down Selling Price Markdown percent on net sales= Total $ markdowns Total Net Sales