Valuation: Valuation at Retail
Use
Valuation at retail in SAP Retail corresponds to all aspects of the retail inventory method as used in the trade. Valuation at Retail is transparent and easy to follow. When you use this method, inventory is updated in the article master at retail and at the same time in the Retail Information System (RIS), allowing you to carry out a number of powerful analyses.
Stock margins and inventory valuation in Financial Accounting are always up to date. And thanks to the integration of valuation at retail with Inventory Management and the integration of Inventory Management with Financial Accounting, Controlling and Profitability Analysis, the valuation data is consistent in all areas.
Valuation at retail can be used for both quantity and value-based Inventory Management and Inventory Management on a value-only basis. The following explains how you can best use valuation at retail for your requirements:
Features
Revaluation at Retail when Inventory is Managed on a Quantity and Value-Basis
If you manage stock on a quantity and value basis, you do not have to manage inventory at retail for accounting purposes. For short-term profitability analysis, however, it provides you with the most up-to-date retail values from the applications. This sales data can be processed as key figures such as gross profit, gross margin or gross margin return on investment (GMROI).
Valuation at retail also allows you to document the effects of changes in retail prices more effectively, especially markdowns. It also allows you to analyze, plan and coordinate markdowns. This is of particular importance in the apparel trade.
Revaluation at Retail when Inventory is Managed on a Value-Only Basis
If you use Inventory Management on a value-only basis, valuation at retail is essential for determining the value of your inventory at cost and is therefore necessary for accounting purposes (see also
Inventory Management: Value-Only Article Level).The retail inventory method (or simply the retail method) used for deducing the cost value of your inventory from the retail value at merchandise category level rather than at individual article level can be used most effectively when you are dealing with a high inventory turn (in the case of a discounter) or with a high number of articles (in the case of a department store).
The cost value is deduced from the retail value on the basis of a factor that is described as the cost multiplier or cost complement. The cost multiplier is the quotient based on the cost value and retail value of the value-only article.
Cost multiplier = delivered value of value-only article / retail value of value-only article
If the cost value is not known in a goods movement (for example, in a sales transaction), it is calculated using the cost multiplier as follows:
Cost value of goods movement = retail value of goods movement ´ cost multiplier
The retail value is calculated as follows:
Retail value of goods movement = article quantity ´ retail price of the article
Example
The two methods are compared in the following example. Three articles are of interest. The tables below show the valuation information as contained in the article master records for each type of inventory management.
Site 0001: Inventory management on a quantity and value-basis
Article number |
Quantity |
Cost |
Retail |
50004711 |
100 |
100 |
129 |
50004712 |
100 |
200 |
298 |
50004713 |
100 |
300 |
399 |
Site 0002: Inventory management on a value-only basis
Article number |
Quantity |
Cost |
Retail |
50004711 |
¾ |
¾ |
¾ |
50004712 |
¾ |
¾ |
¾ |
50004713 |
¾ |
¾ |
¾ |
R1000 |
¾ |
600 |
826 |
In this case
, all the articles are managed under value-only article R1000:If, for example, 10 pieces of article 50004711 are sold for 1.29 each, the goods movement is valuated as follows (rounded values):
Cost multiplier = 600.00 / 826.00 = 0.7264
Retail value of goods movement = 10 ´ 1.29 = 12.90
Cost value of goods movement = 12.90 ´ 0.7264 = 9.37
The goods movement results in the valuation data for the value-only article R1000 being updated as follows:
New retail value: 826.00 - 12.90 = 813.10
New cost value: 813.10 ´ 0.7264 = 590.63