How to calculate store profitability

First of all, one should throw aside the hackneyed phrases about the social responsibility of business, about the company's mission and other high-flying things that are remotely related directly to entrepreneurship. In the vast majority of cases, the main purpose of the existence of a business is the profit of its owners. In economic analysis, this expression hides the indicator of profitability.

Instruction manual

1

Traditionally, profitability is defined as the share of profit in revenue. Accordingly, in order to calculate the profitability of the store, it is necessary to determine three components: revenue for a certain period, all expenses for the same time (including the cost of sales) and the profit received in absolute terms.

2

It is likely that there will be no problems with calculating the revenue indicator. Usually the main cash flow of the store goes through the cashier. Non-cash payments are accepted from buyers (mostly, these are large stores serving the b2b sector). If both payment methods apply, summarize the revenue for them.

3

Make a table in which line by line write down all associated activities costs. To calculate profitability, all expenses should be calculated using the “shipping method”. This method means that all costs incurred during the period are evenly distributed over all months included in the period. For example, in the current quarter in the store computer equipment was repaired for 3, 000 rubles. For proper accounting, 1000 rubles should be included in the repair costs of each of the 3 months.

4

To calculate the profitability of the store, add up all the expenses for the selected period and subtract their amount from the revenue. The final value is the profit received from the work of the store in a given period of time. Dividing the absolute amount of profit by revenue and multiplying the result by 100%, you will get a profitability indicator.

product store profitability