STRATA:G® Financial Toolkits
A Difference-Maker For Business Advisors

Key Ratios Benchmarks, Retail Businesses

 

Choose any one of the retail or restaurant verticals listed on this page, and click the link. 

Once on that vertical's page, see Retail Benchmark Trend Charts for the past 5 years for 6 key ratios.

See below for more information about these benchmark numbers.

 

About the Benchmarks

We have identified six key ratios as particularly important for retailers to monitor, project, and manage:

  • Current Ratio
  • Debt-to-Worth Ratio
  • Gross Margin Percent
  • Pre-Tax Profit Percent
  • Inventory Turnover
  • GMROI (Gross Margin Return on Inventory Investment)

We publish the six key ratio performance metrics in chart form to illustrate the trends over time. Use the links below to go directly to a particular vertical's page of Key Ratios Benchmarks.

The Retail verticals featured at the Business STRATA:G® site reflect the definitions and designations of the North American Industrial Classification System (NAICS). The top of each Retail Vertical Page includes the NAICS code and the NAICS definition for that industry segment.

The source data is ProSight Financial Association's Annual Statement Studies. As you may know, ProSight collects financial statements from banks, and aggregates the findings for all industries. ProSight presents their data in 3 sections: the Top Quartile, the Middle Quartiles, the Bottom Quartile, for five different ranges of annual sales volume. Key Ratios Benchmarks posted on the Business Strata-G site are based on the Middle Quartiles results.

For more information about using these Key Retail Financial Benchmarks, go to the Retail Benchmarks Resource Center at The Retail Owners Institute®.

Key Financial Ratios

The Formulas • Where to Find the Numbers • What Each Ratio Tells You

 

Ratio How to Calculate Your Key Financial Ratios Where to Find the Information What the Ratios Tell
Current Ratio Current Assets divided by Current Liabilities Your balance sheet Tests for solvency or ability to meet current debt obligations. Measures how well you can cover current liabilities with liquid assets.  (Higher is better; 2.0 is average.)
Quick Ratio Cash + Accounts Receivable divided by Current Liabilities Your balance sheet

Tests the degree of solvency most strictly, using only the most liquid current assets. 

(Higher is better; 0.5 is average.)
Debt-to-Worth Ratio Total Liabilities divided by Total Owner's Equity Your balance sheet

Compares what the company "owes" creditors to what it "owns." Measures the financial strength of the business.

(Lower is better; 1.0 is average.)
Inventory Turnover COGS (Cost of Goods Sold) divided by Average Inventory @Cost COGS are recorded on your income statement; Inventory is found on your balance sheet.

Measures how often, at present rate of sales, your entire inventory is completely sold and replaced during a given year. Measures inventory "velocity." 

(Higher is better; average depends on industry.)
Gross Margin % Gross Profit $ divided by Net Sales Your income statement (P&L) Indicates percentage of sales dollars remaining after costs related to purchasing merchandise are recognized.
Profit Before Taxes % Profit Before Taxes divided by Net Sales Your income statement (P&L)

Indicates percentage of sales dollars remaining after all costs (except taxes) are recognized.

(Higher is better; average depends on industry.)
Return on Assets (ROA) Profit Before Taxes divided by Net Assets Your income statement and balance sheet

Indicates pretax return on assets; measures productivity of assets. 

(Higher is better; average depends on industry.)
Gross Margin Return on Inventory (GMROI)  Gross Margin $ divided by Average Inventory @Cost Gross Margin - your income statement
Inventory @ Cost - your balance sheet.		 Measures the gross margin returned for each dollar invested in inventory. (Higher is better; average depends on industry.)