Ratio Analysis of Retail Stores

To analyze the financial position

MERITS

• Ratio analysis helps to compare the individual

retail stores with the bench markings of the

market or retail sector

• It helps the chain retail stores to develop

healthy competition among their stores and

making comparison among the stores

• It plays vital role in making strategic decisions

like Credit expansion, Loan availement etc

DE - MERITS

• Comparison should be made among the

homogeneous stores and it will not be suitable

for the heterogonous stores

• Accurate data needs to be available for the

purpose of comparison, if data contains any error

it will effect the purpose of the ratio analysis

• Suitable bench markings of the sector needs to

be selected properly for the purpose of

comparison

Financial Ratio Analysis

Gross Profit Ratio

Gross Profit / Gross Turnover

Net Profit Ratio

Net Profit / Net Turnover

Inventory Turnover Ratio

Closing Stock / Gross Turnover

Interest Coverage Ratio

Earning Before Interest & Tax / Interest Expense

Debt Equity Ratio

Long term liabilities / Equity funds

Return on Working Capital

Net Profit/Working Capital

Employee cost Vs Turnover

Employee cost / Turnover

Return on Investment

Net Profit / (Capital Funds + Loan Funds)

Non Financial Ratio Analysis

Revenue Per Square Meter

Total Sales Revenue / Number of Square Meters

Revenue per Basket

Total Sales Revenue / Number of Baskets

Revenue Per Customer

Total Sales Revenue / Number of Customers

Revenue Per Bill

Total Sales Revenue / Number of Bills

Profit Per Customer

Profit / Number of Customers

Operating cost per Customer

Total Operating Cost / Number of customers

Marketing cost per customer

Marketing cost / Number of Customers

Revenue Per Foot Fall

Total Revenue / Total footfall

Employees cost per square meter

Employee Cost / Number of Square Meters