Unit 2 AOS1
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8 Terms
Gross profit margin
A profitability indicator that measures average mark-up by calculating the percentage of sales revenue retained by gross profit.
GPM Calculation
Gross profit/Net sales x100
Net profit margin
A profitability indicator that measures expense control by calculating the percentage of sales revenue retained as net profit.
NPM Calculation
Net profit/Net sales x100
Inventory turnover
An efficiency indicator that measures the average number of days it takes for a business to convert inventory into a sale.
Inventory turnover calculation
Average inventory/cost of goods sold x365
Average inventory= Inventory at start + inventory at end/2
Physical count
Counting number of units each line of inventory infrequently because of time and cost matters
Inventory rotation
Older inventory moved to front and new to the back so perishable items dont have to be discarded.
Note 
Flashcards (21)