This section describes how the Gross Profit Margin is calculated in CStoreOffice®.
The list of abbreviations used in this section:
GPM - Gross Profit Margin
RMA - Retail Method of Accounting
RMALI - Retail Method of Accounting with Line Item
IMA - Ingredient Method of Accounting
IMAR - Ingredient Method of Accounting with Recipe
GPM Limitations
- GPM is valid for operational activities only. For accounting, profit and margins must be calculated using standard accounting formulas.
- GPM must be calculated for each category separately.
- Users must mark IMA categories appropriately.
- Users should maintain proper procedures for four different types of maintaining inventory.
- Retail Method of Accounting (RMA)
- Retail Method of Accounting with Line Item (RMALI)
- Ingredient Method of Accounting (IMA)
- Ingredient Method of Accounting with Recipe (IMAR)
- RMA and IMA items must be in separate categories.
- RMA and RMALI items can be in the same category, however we recommend keeping them separate. It applies to IMA and IMAR items.
GPM Calculation Formula
| GPM = (R-C) / R * 100% | |
|---|---|
| Where R - gross retail calculated for the period (normally of 30 days). |
And C- gross cost calculated for the period (normally of 30 days). |
| R = Rp + Rpc + Radj + Rs | C = Cp + Cb + Cpc - Cadj |
| Rp - accumulated retail value of all items purchased for the period (purchases are positive number, credits are negative numbers). | Cp - accumulated cost of all items purchased for the period (purchases are positive number, credits are negative numbers). |
| Rpc - accumulated retail value of all price changes for the period (price increases are positive number, price decreases are negative numbers). | Cb - accumulated cost value of all buydowns by purchases for the period (buydowns normally are negative numbers decreasing cost for the period and increasing GPM). |
| Radj - accumulated retail value of all inventory adjustments for the period (inventory overages are positive number, shortages are negative). This variable is calculated only for retail method of accounting (RMA) categories. | Cpc - accumulated cost value of all price changes for the period (price increases are positive number, price decreases are negative numbers). |
| Rs - accumulated retail value of all spoilage for the period (spoilage is negative number). | Cadj - accumulated cost value of all inventory adjustments for the period (inventory overages are positive number, shortages are negative). This variable is calculated only for ingredient method of accounting (IMA) categories. |
Do not include Spoilage into GPM calculation for IMA categories.
