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June 12th, 2018, 10:58 AM   #1
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Bone-Head in Search of Direction

Hello out there!

I'm trying to calculate true growth year over year, and I'm thinking myself in circles. I dont know if I'm using the right terms.

I understand basic growth% YoY which would be (TY-LY)/LY. That being said, I am trying to capture growth factoring in the change in "members" in the data set between TY and LY.

For example:

I have a store that sold 1000 units TY and 700 LY over the same time period. Using a Basic Growth calc (1000-700)/700 I would get an approximate 42.85% increase over LY for that time period.

However, I am carrying 30% more items in my store TY than over the same period LY. How do I "even out" the TY/LY sales increase using the growth of Items offered TY/LY? Or in other words, how do I put TY and LY on equal footing?

I'm stumped!!!
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June 12th, 2018, 11:38 AM   #2
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There is no perfect way to do this. It depends in part on what exactly is most important for you to know. It also depends in part on what numbers are available to you.

If you know that a was last year's sales of what was in stock both years and b was this year's sales of those items and c was this year's sales of new items.

So the percentage increase in total sales is $100 * \dfrac{b + c}{a}.$

The percentage increase due to "old" stock is $100 * \dfrac{b}{a}.$

The percentage increase due to "new" stock is $100 * \dfrac{c}{a}.$

That is sort of intuitive, but things get stranger if you do not have b and c separately.
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June 12th, 2018, 01:49 PM   #3
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Thanks for the reply!.

Yes...things are about to get stranger as I do not have b and c separate.

I know the Sales TY and Sales LY, and the # of items TY and the # of items LY...but I do not know if there were any items overlapping between TY and LY.

Do I have any options?
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June 12th, 2018, 02:58 PM   #4
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Quote:
Originally Posted by DizzyStar View Post
Thanks for the reply!.

Yes...things are about to get stranger as I do not have b and c separate.

I know the Sales TY and Sales LY, and the # of items TY and the # of items LY...but I do not know if there were any items overlapping between TY and LY.

Do I have any options?
OK. When you don't have data, you must make guesses. You try to make the best guesses that you can so you can have some confidence that the resulting numbers will not be too distant from reality. One thing you can do is to make different guesses to get a range of estimates. Whether the following approach is close enough to your facts to make sense is up to you to judge, but it will give you an idea of how sensible guessing might work.

You said in your first post that you stocked 30% more kinds of items this year. Now in the absence of any information, I'd guess that you added some early in the year and some late in the year, meaning that, on average, your sales of new items were for half a year, not a full year. So let's say as a crude estimate that new items represented 8%, 15%, or 22% of sales.

Let a be last year's sales and b be this year's sales. Then sales growth overall is obviously

$100 * \dfrac{b - a}{a}\%.$

$\text {Estimated sales of new items } = 8\% \implies$

$\text {Estimated percentage increase in sales of old items } = 100 * \dfrac{0.92b - a}{a}\%.$

The 0.92 = 1 - 0.08. Follow the logic? Notice I was clear that it was an estimate; otherwise you begin believing that guesses are truth. But we made different guesses. So work those out too.

$\text {Estimated sales of new items } = 15\% \implies$

$\text {Estimated percentage increase in sales of old items } = 100 * \dfrac{0.85b - a}{a}\%.$

$\text {Estimated sales of new items } = 22% \implies$

$\text {Estimated percentage increase in sales of old items } = 100 * \dfrac{0.78b - a}{a}\%.$

If the three answers are not that different, you can have a fair amount of confidence that the numbers are reasonable. If the numbers are quite different, the best you can say is that it is probably better than x but worse than y.

The other thing that this analysis shows is that you want to know, by type, the number of items sold and sales revenue. Your POS system should be able to track that for you.

Last edited by skipjack; June 14th, 2018 at 11:02 AM.
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June 14th, 2018, 07:10 AM   #5
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Thank you! I can work with this
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