Often times there is a need for an objective way to distribute inventory between two or more stores or departments or classes or sizes, etc. Rather than using a seat-of-the-pants or traditional method (we have always done it this way) there is a mathematical model to solve this dilemma. Let’s use some hypothetical statistics to […]
4-5-4 Retail Accounting Calendar
Business Cycles A business cycle is the minimum period of time which permits the performance of all the activities related to the function carried on by a particular business. As it relates to retailing, a business cycle is that period of time between the ordering of merchandise for a selling season and the order of […]
The Importance of Physical Inventories
One of the least enjoyable aspects of retailing is performing physical inventories. It is a laborious and tedious task that requires extra hours when you and your staff are most tired and irritable. Frankly, it’s about as much fun as brushing your teeth with battery acid! While this overstates the obvious, what isn’t always obvious […]
Inventory Valuation Methods: Cost and Retail Inventory Methods
Prior to the early part of the last century, when Professor McNair at NYU developed the Retail Inventory Method (RIM), the only method of evaluating the cost of inventory on hand was the Direct Cost Method (DCM). The DCM involved marking the actual invoice cost of each item in code on the item price tag. […]
Achieving Profits in Every Business Cycle, Part II
In the prior issue we laid the foundation for what we expect from our business for the risks taken. Let’s proceed to discuss the ways of insuring a healthy profit in every business cycle, maybe not a 25% return on capital every year but more than that in good years to offset less than 25% […]
