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.

THANK YOU