BM4324 Lecture 1 - ACT Part PDF

Official (Open) 1. SALES AGAINST BUDGET & AGAINST PREVIOUS YEAR (THE TOP LINE) ============================================================== - Indicators of how much more sales the company is anticipating to generate against the previous year - Forecast includes - Market trends- e...

Official (Open) 1. SALES AGAINST BUDGET & AGAINST PREVIOUS YEAR (THE TOP LINE) ============================================================== - Indicators of how much more sales the company is anticipating to generate against the previous year - Forecast includes - Market trends- e.g omnichannel, digitalization - Political stability- e.g Hong Kong & Thailand riots- sourcing - Commodity price hikes- e.g. electricity tariff increase 6% 2019 - Changes in taxes -- e.g. SG increase GST (7-9%) 2021-25 - Foreseeable trends- e.g. fashion trends, eating habits (impossible meat)    Official (Open) 7. STOCK TURN ------------- Official (Open) 8. GROSS MARGIN RETURN ON INVENTORY (GMROI) ------------------------------------------- - Evaluates whether a sufficient gross margin is being earned on the products purchased in relation to the investment in - Calculate the gross profit margins of the average inventory at cost and dividing this by the average cost of inventory - GPM/Cost of Inventory - A ratio that indicates the **number of times gross margin is earned from the inventory investment**  Official (Open) 10. AVERAGE SELLING PRICE (ASP) AGAINST THE PLAN ------------------------------------------------ - The price at which particular class of merchandise is **typically sold** - Watches/Jewellery vs Garments/Fashion accessories - ASP of Garments/Fashion is likely to be driven down by products that becomes less attractive or novelty wears off faster - Average selling price goes below plan - **Underselling products before the end of their life-cycle** - **Introducing higher than planned levels of low-priced items** - **Aggressive price promotions or ill-managed discounts** Official (Open) 11. MONTHLY MARK-DOWNS, ACCUMULATIVE - Planned for by monthly and involve a standard set of mark-down percentages implemented on a standard schedule, across all departments or stores - **Excessive use of mark-downs** equates to loss of profits - Wise buyers can negotiate **cooperation** or **compensation from vendors** on mark-downs as part of their purchasing deal Official (Open) 12. STOCK OBSOLESCENCE (OBSL) -- YEAR TO DATE =============== - OBSL reserves are financial tools based on historical mark-down data that enable - E.g. **Reduction of 40%** on an inventory that is **older than 7 months**, **80-90%** off for those **older than a year**  Official (Open) 14. RETURN ON INVESTMENT (ROI) ------------------------------  Official (Open) PRODUCTIVITY MEASURES ===================== Sales target = \$500000 Budgeted margin = 30% 3 ways to measure