Sales & Cost

Analysis

Session IX
Dated : 15th September 2008

1
 Sales Analysis Framework

Sales Analysis

Organisational
Types of Sales Type of Analysis
Level of Analysis

Zones Comparison with

Total sales
Regions - within Organisation
Type of Product sales
States - Industry & Competitors
Type of Account Sales
Districts - Forecasts
Type of distribution Sales
Territories - Quotas
Order size Sales
Accounts - Previous Period

2
 Selling Budget
 Achievement

3
 Percentage of Sales Method

 Objective and Task Method

 Zero Based Budget

4
 Classification Actual Target Actual %achieved %achieved
2007- 2008 2008 – over 07-08 over 08
08 -09 09 -09

Salaries
Commissions
Bonus
Travel
Lodging
Food
Miscellaneous
Recruiting
Training
Promotions
Advertisements

5
 Profitability Approach
 Income Statement Approach
 Full Cost Approach
 Contribution Approach

6
 Full Cost Approach  Contribution
 Sales approach
 (-) Cost of Goods Sold
 Sales
(-) Direct Selling  (-) Cost of Goods Sold
Expenses (-) Direct Selling
(-) Allocated portion Expenses
of shared Expenses
= Contribution Profit
= Net Profit

7
Activity based Costing [ ABC ]

8
Return on Asset Managed [ ROAM ]

 ROAM
 = profit contribution as percentage of
Sales * Asset turnover rate


= (profit contribution / Sales) *
(Sales / Asset managed)

9
Productivity Analysis
 Increasing output with the same
level of Input

 Maintaining the same level of output

by using lesser input

10
Receivable

11
Objective of credit
 Credits are extended to
 Generate sales
 Non availability of ready cash with them
 Generate cash from customer & pay back

 Protect current level of sales

 Expand sales
 Bring down sales cost
 Generate additional profit

12
The credit dilemma
 Credit extended have
 Sales generated
 Cost increased
 Collection cost
 Capital cost

 Delinquency cost

 Default cost

 Negative effects on the profit of the

firm

13
Credit Analysis
 Obtaining Credit Information
 Internal source
 External source
 Financial statements
 Bank references

 Trade references

 Analysis of credit information

14
Credit terms
 Credit period
 Credit limit
 Cash discount

15
Receivable Collection
 Policy of collection
 Follow up systems
 Preparation of Accounts Receivable statements
 Age-wise breakup of Accounts Receivable
 Personal visit for follow up
 Letters of reminders
 Involvement of collection professionals
 Legal remedies

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