Financial Ratios for Retail

There are many financial ratios that can be used to evaluate the performance of a retail store, but here are a few key ratios:

1. Gross margin ratio: This ratio measures the percentage of sales revenue that remains after subtracting the cost of goods sold (COGS). A higher gross margin ratio indicates that the store is able to charge more for its products, or that it is able to source products at a lower cost.

2. Inventory turnover ratio: This ratio measures how quickly the store is able to sell its inventory. A higher inventory turnover ratio indicates that the store is able to move inventory quickly, which can help improve cash flow and reduce the risk of obsolescence or spoilage.

3. Return on assets (ROA) ratio: This ratio measures how efficiently the store is using its assets to generate profits. A higher ROA ratio indicates that the store is generating more profits per dollar of assets.

4. Debt to equity ratio: This ratio measures the amount of debt the store has relative to its equity. A lower debt to equity ratio indicates that the store has less debt relative to its equity, which can be an indicator of financial stability and lower risk.

5. Operating expense ratio: This ratio measures the percentage of sales revenue that is spent on operating expenses, such as rent, utilities, and salaries. A lower operating expense ratio indicates that the store is able to operate efficiently and keep costs under control.

Note that the appropriate ratios may vary depending on the specific type of retail store and the industry it operates in. It's also important to compare these ratios to industry benchmarks and trends to get a better sense of how the store is performing relative to its peers.