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GMROII
Gross Margin Return on Inventory Investment (GMROII) is a ratio in microeconomics that describes a seller's return on every unit of currency spent on inventory. It is one way to determine how profitable the seller's inventory is, and describes the relationship between the profit earned from total sales, and the amount invested in the inventory sold. Generally for a seller, the higher the GMROII the better. Since the inventory is a very widely ranging factor in a seller's investment in working capital, it is important for the seller to know how much he might expect to gain from it. The GMROII answers the question "for each unit of average inventory held at cost, how many units of currency of gross profit I generated in one year?" GMROII is traditionally calculated by using one year's gross profit against the average of 12 or 13 units of inventory at cost. GMROII may vary depending on which segment we are analyzing (Women Apparel, Toys, Home, Sport Ware, etc.), but a rule of thumb ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Gross Margin
Gross margin is the difference between revenue and cost of goods sold (COGS), divided by revenue. Gross margin is expressed as a percentage. Generally, it is calculated as the selling price of an item, less the cost of goods sold (e. g. production or acquisition costs, not including indirect fixed costs like office expenses, rent, or administrative costs), then divided by the same selling price. "Gross margin" is often used interchangeably with "gross profit", however the terms are different: "gross ''profit''" is technically an absolute monetary amount and "gross ''margin''" is technically a percentage or ratio. Gross margin is a kind of profit margin, specifically a form of profit divided by net revenue, e. g., gross (profit) margin, operating (profit) margin, net (profit) margin, etc. Purpose The purpose of margins is "to determine the value of incremental sales, and to guide pricing and promotion decision."Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Re ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Microeconomics
Microeconomics is a branch of mainstream economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. Microeconomics focuses on the study of individual markets, sectors, or industries as opposed to the national economy as whole, which is studied in macroeconomics. One goal of microeconomics is to analyze the market mechanisms that establish relative prices among goods and services and allocate limited resources among alternative uses. Microeconomics shows conditions under which free markets lead to desirable allocations. It also analyzes market failure, where markets fail to produce efficient results. While microeconomics focuses on firms and individuals, macroeconomics focuses on the sum total of economic activity, dealing with the issues of growth, inflation, and unemployment and with national policies relating to these issues. Microeconomics also d ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Inventory
Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation. Inventory management is a discipline primarily about specifying the shape and placement of stocked goods. It is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials. The concept of inventory, stock or work in process (or work in progress) has been extended from manufacturing systems to service businesses and projects, by generalizing the definition to be "all work within the process of production—all work that is or has occurred prior to the completion of production". In the context of a manufacturing production system, inventory refers to all work that has occurred—raw materials, partially finished products, finished products prior to sale and departure from the manufacturing system. ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Working Capital
Working capital (WC) is a financial metric which represents operating liquidity available to a business, organisation, or other entity, including governmental entities. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital is equal to current assets. Working capital is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit and negative working capital. A company can be endowed with assets and profitability but may fall short of liquidity if its assets cannot be readily converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts rec ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Rule Of Thumb
In English, the phrase ''rule of thumb'' refers to an approximate method for doing something, based on practical experience rather than theory. This usage of the phrase can be traced back to the 17th century and has been associated with various trades where quantities were measured by comparison to the width or length of a thumb. A modern folk etymology holds that the phrase is derived from the maximum width of a stick allowed for wife-beating under English common law, but no such law ever existed. This belief may have originated in a rumored statement by 18th-century judge Sir Francis Buller that a man may beat his wife with a stick no wider than his thumb. The rumor produced numerous jokes and satirical cartoons at Buller's expense, but there is no record that he made such a statement. English jurist Sir William Blackstone wrote in his ''Commentaries on the Laws of England'' of an "old law" that once allowed "moderate" beatings by husbands, but he did not mention thumbs or an ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Net Profit
In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, and taxes for an accounting period. It is computed as the residual of all revenues and gains less all expenses and losses for the period,Stickney, et al. (2009) Financial Accounting: An Introduction to Concepts, Methods, and Uses. Cengage Learning and has also been defined as the net increase in shareholders' equity that results from a company's operations.Needles, et al. (2010) Financial Accounting. Cengage Learning. It is different from gross income, which only deducts the cost of goods sold from revenue. For households and individuals, net income refers to the (gross) income minus taxes and other deductions (e.g. mandatory pension contributions). Definition Net income can be distributed among holders of common stock as a dividend or ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Operating Leverage
Operating leverage is a measure of how revenue growth translates into growth in operating income. It is a measure of leverage, and of how risky, or volatile, a company's operating income is. Definition There are various measures of operating leverage, which can be interpreted analogously to financial leverage. Costs One analogy is "fixed costs + variable costs = total costs . . . is similar to . . . debt + equity = assets". This analogy is partly motivated because, for a given amount of debt, debt servicing is a fixed cost. This leads to two measures of operating leverage: One measure is fixed costs to total costs: :\frac=\frac Compare to debt to value, which is :\frac=\frac Another measure is fixed costs to variable costs: :\frac Compare to debt to equity ratio: :\frac Both of these measures depend on sales: if the unit variable cost is constant, then as sales increase, operating leverage (as measured by fixed costs to total costs or variable costs) decreases. Contributi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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