Retail math formulas

1. Retail Math Formulas – A Basic
Overview
Love math? Hope so! If you are working in retail at any level, math will definitely be a
part of your responsibilities. From counting inventory to managing your open to buy,
numbers will be a big part of your day. Below is a break down of the basic math
formulas retailers should know in order to run their business’ effectively.
Cost of Goods + Retail Markup = Retail Price
Retail Price – Cost of Goods = Markup
Retail Price – Markup = Cost of Goods
Beginning Inventory (in $ or Sku Count) + Purchases – Endoing Inventory = Goods
Sold (in $ or Sku Count)
Total Sales – Cost of Goods = Gross Margin
Gross Margin $ / Average Inventory Cost = Gross Margin Return On Investment
Net Sales / Average Retail Inventory (Sku Count) = Inventory Turnover
Gross Sales – Returns & Allowances = Net Sales
Projected Sales + Projected Markdowns + Planned End of Month Inventory – Planned
Beginning of Month Inventory = Open to Buy (OTB)
Units Sold / Units Received = Sell Through %
Beginning of Month Stock / Total Month Sales = Stock to Sales Ratio