Infosys-Oracle Blog

Let me explain two important concepts- One of the most important concepts is the way retailers report their financials, they use a 4-4-5 calendar with February often being the starting month. This gives them a very good way of comparing sales on period on period basis, since each period every year has the same number of selling days. It also acts as the best way to divide the entire year into periods with an equal number of weekends, which is when the retail sales are the highest.

The other main difference in retail accounting is the way company profits are calculated.

Sales Cost – Cost of Merchandise sold = Gross Profit

Gross Profit – Operating expenses = Net Profit.

 The two main kinds of costs associated with retailers have implications for how the business divisions are organized, systems are implemented and financial reporting is done. The most common terms for these two main costs are Merchandise Costs (or costs incurred towards procuring Goods for Resale) and Expense (costs incurred in procuring Goods not for Resale). The nature of these two entities of the retail business are very different, merchandise transactions are usually high in volume and spread across a larger base of steady suppliers. The Expense transactions are lower in volume and are spread across a base of transient suppliers (including several one-time only suppliers), employees (payroll costs) or other vendors of services and goods.

These two concepts have clearly established a case for a new perspective on Implementing Retail Financials as opposed to implementing merely financials for Retailers