Chapter_5 - Chapter 5 Merchandising Operations LO 1...

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Chapter 5 “Merchandising Operations”
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LO 1 Management Issues in Merchandising Business Service companies
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LO1 Service companies Merchandising companies (can be wholesalers or retailers)
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LO 1 Service companies Merchandising companies (can be wholesalers or retailers) Merchandising inventory account – the goods on hand for sale to customers
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LO 1 Management Issues in Merchandising Businesses: Cash flow management Profitability management Choice of inventory system Control of merchandising operations
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LO 1 Cash Flow Management : See Figure 1, p. 168. That’s called the operating cycle: Purchase of merchandise inventory for cash or credit from suppliers/vendors Payment for purchases made on credit Sales of merchandise inventory for cash or on credit to customers Collection of cash from credit sales from customers
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LO 1 In an ideal world, every company would collect its receivables faster and pay its payables later. Types of payments for purchases : - Cash – funds from these sales are available to the merchandiser immediately - Bank credit card – funds from these sales are available to the merchandiser immediately (no AR is created ; the bank has a AR from credit card holder=customer, not the merchandiser ) - Store credit – merchandiser must wait a period of time before receiving cash from customer (AR is created )
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LO 1 Profitability Management : - Achieving a satisfactory Gross Margin (GM or GP= Net Sales – COGS; p. 175) - Total sales less Returns = Net Sales. -
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This note was uploaded on 12/10/2009 for the course BUS 311 taught by Professor Fas during the Spring '09 term at American University in Bulgaria.

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Chapter_5 - Chapter 5 Merchandising Operations LO 1...

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