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Thread: Health of retail business

  1. #1

    Default Health of retail business


    I am working on finding out the health of our business performing the Profit/ Loss statement analysis. My question is for calculating the cost of goods for any third party items(items bought from a warehouse/dealer like chocolates,butter,cookies etc) should I calculate the gross sum of all purchase invoice made for that duration(1 month) like the lump sum payments made to this client for a month considering one client has several products or should I get the product cost of one unit of that item and then calculate the number of units purchased during that time frame for each product. The same applies to sales should I just go with the sales revenue(daily sales) for a month from the register or should I calculate the sales price of each item(n units) considering I know the selling price of each item. Please throw your ideas.

    I had already opened a thread related to P/L but I guess this is different question from the earlier one. I apologize if this cause any inconvenience.


  2. #2
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    vangogh's Avatar

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    I'm not really sure, but I did want to respond to keep your thread active. I would think as long as you're ultimately comparing apples to apples either way is fine. You're not in the end so much interested in either of these calculations in isolation, but rather how profit compares to loss. As long as both end up being compared over the same time frame you should be ok.

    Could you try the calculations both ways. I assume the numbers won't come out exactly the same since you'd be starting in different places. It would give you a range of P/L, which might provide more information for you.
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  3. #3


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  4. #4
    Registered User
    Einstein II
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    Feb 2021
    Hauppauge, NY


    For a smaller business one can do calculations by own but you should know that what should include and what should exclude from expenses or investments.
    Like a smaller business calculations will be easier because you know what amount you've spent in business investment as principal amount, and expenses like rentals, monthly bills for electricity, broadband, staffs, etc. and then you can check whether the total income is what you've spent is bigger than the expenses or not.
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