How to Get to the Numbers that Matter in Retail

HOW TO GET TO THE NUMBERS THAT MATTER IN RETAIL
Martec International, Inc.
Compliments ofHOW TO GET TO THE
NUMBERS THAT MATTER
IN RETAIL
MARTEC INTERNATIONAL ASSISTS RETAILERS TO IMPROVE PERFORMANCE IN THE BUSINESS PROCESSES OF BUYING, MERCHANDISE MANAGEMENT, MARKETING, SUPPLY CHAIN, WAREHOUSING, DISTRIBUTION AND STORE OPERATIONS. ADDITIONALLY, WE HELP VENDORS EXECUTE THEIR GO TO MARKET STRATEGIES WITH RETAILERS MORE SUCCESSFULLY.
OUR CLIENTS INCLUDE RETAILERS, TECHNOLOGY AND MERCHANDISE VENDORS, BANKS, TELECOMMUNICATIONS COMPANIES AND VENTURE CAPITALISTS.
WE DELIVER CLEAR, WELL THOUGHT OUT STRATEGIES, BEST OF BREED BUSINESS PROCESSES, SUCCESSFULLY IMPLEMENTED SYSTEMS AND THE SKILLS TRANSFER NECESSARY TO MAKE THE CLIENT'S PERSONNEL FULLY EFFECTIVE.
Martec International, Inc1050 Crown Pointe ParkwaySuite 945Atlanta, GA 30338USA
Tel: (770) 392 9664Fax: (770) 392 9476www.martec-international.com CONTENTS

INTRODUCTION 1
KE Y FIN ANCIAL METRIC S 1
Re turn on Capit al Emplo yed 2
Inv ento ry Turn 2
Gr oss M argin Pe rcent 3
Ex pense s Percen t To Sale s 3
BUDGETING AND FINANCIAL PLANNING 4
REALATIONSHIP WITH MERCHANDISE AND OPEN TO BUY PLANS 5
PURCHASING MANAGEMENT 5
VENDOR MANAGEMENT AND ITS RELATIONSHIP TO CASH FLOW 6
CO-OP FUNDS AND VENDOR ADVERTISING 7
MONDAY MORNING AND END OF MONTH ROUTINES 7
INVOICE MATCHING 8
FINANCIAL DANGER SIGNS AND HOW TO AVOID PITFALLS 8
MANAGING THE STORE AT THE TRADING STATEMENT LEVEL 9
ADDING NEW STORES AND THE IMPLICATIONS FOR PROFITABILITY AND CASH FLOW 9
DEALING WITH REVERSE PREMIUMS 9
BALENCE SHEET MANAGEMENT 10
INVENTORY-AN ASSET OR A LIABILITY 10
COMPLIANCE AND THE IMPLICATIONS OF SARBANES-OXLEY 11
THE ROLE OF SOFTWARE SOLUTIONS IN MODERN FINANCIAL MANAGEMENT 11
SUMMARY AND CONCLUSIONS 11 HOW TO GET TO THE NUMBERS THAT MATTER IN RETAIL
INTRODUCTION
The objective of this white paper is to review various aspects of retail ? nancial management and to draw important lessons for small and mid-size retailers. The paper addresses a wide range of topics that impact a retailer's ? nancial success. Many of these are common to retailers of all sizes, but some are speci? c to mid to small tier businesses and many cautionary notes are given. The topics covered include:. Key ? nancial metrics and their importance. . Budgeting and ? nancial planning.. Relationship of ? nancial plans to merchandise and Open-To-Buy plans.. Purchasing management.. Invoice matching.. Vendor management and its relationship to cash ? ow.. Co-op funds and vendor advertising support.. Operational monitoring.. Monday morning and end of month routines.. Financial danger signs and how to avoid pitfalls.. Managing the store at the Trading Statement level.. Adding new stores and the implications for pro? tability and cash ? ow.. Dealing with reverse premiums.. Balance sheet management.. Inventory-an asset or a liability?. The role of computer systems in modern ? nancial management.. Compliance and the implications of Sarbanes-Oxley.
KEY FINANCIAL METRICS
The table that follows shows the key metrics used by most retailers to track and manage their performance. In particular, The Finance Function is very concerned with Return on Capital Employed or Return on Net Assets, Inventory Turn, Gross Margin Percent, Expenses Percent To Sales and expenses measured by line item and expressed as a percent to sales. They may also be concerned with other measures such as the Quick Ratio, Acid Ratio, Gearing and Interest Cover. This latter set tends to be examined infrequently, perhaps quarterly, half yearly or annually.
Widely Used Buying & Store Finance MarketingThrough The Merchandisiing OperationsBusiness
Sales Sales Sales . Return on capital . Market Share. Sales vs. Last . Sell Through . Average Sale ... [download for more]