PROFITABILITY

PROFITABILITY - HUEC 3043 Profitability From Top to Bottom

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HUEC 3043 Profitability 
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From Top to Bottom Profit and Loss Report Income Statement prepared periodically from  department to organization Measures profitability and evaluates current and  past performance Uses 3 basic profit factors Operating Income Cost of Goods Sold Operating Expenses
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Trend Analysis Fiscal Numbers follow trends Each Number is a “Style” and follow seasonal  trends.   By looking at the Financial Zeitgeist you will  be able to plan for upcoming season based  on previous years financial cycles
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Operating Income Broken down into 2 Categories:  Gross Sales and Net Sales Gross Sales: Entire dollar amount received  for goods sold during a given period. List  price before any discounts. Net Sales: Sales total after consumer returns  and allowances have been deducted from  Gross Sales
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Area Between Gross and Net Sales/Income Gross Sales is calculated by multiplying the  retail amount of goods sold by the number of  items sold $34.99 x 15 shirts = $524.85 Gross Not typically used as evaluation Retailers allow returns, discounts,  allowances, coupons, etc
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Net Sales is #1 Because of the Returns and Allowances- Net  Sales is much more accurate sales figure Calculated by subtracting returns and  allowances from Gross Sales If the 15 shirts we just sold are 30% off then: $34.99 X 15u = $524.85 Gross $34.99 X .30 = $10.50/unit customer allowance $10.50 X 15u = $157.50 total customer allowance $524.85 - $157.50 = $367.35 Net Sales
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Returns and Allowances Often expressed as a percentage Different types of Returns/Allowances Customer returns Corporate directed returns Manufacturer recalls Corporate directed markdowns Manufacturer directed markdowns Store directed markdowns Coupons $157.50 returns/allowances / $524.50 gross sales = 30%
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This note was uploaded on 02/14/2012 for the course HUEC 3043 taught by Professor Freeman during the Fall '10 term at LSU.

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PROFITABILITY - HUEC 3043 Profitability From Top to Bottom

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