MODEL FOR ANALYSES OF MERCHANDISING AND SALES GROWTH RELATED INVESTMENTS

Profit and Loss statement is main financial statement to evaluate company performance, management decisions as well are based on P&L, and bonuses to management of the companies are to large extent paid based on P&L results. However P&L does not present information related to decisions taken on pricing and merchandising and top line of the P&L presents Total Revenue after volume based discounts and merchandising applied to price. Analyses of ratios to Total Revenue can lead to inadequate decisions. Objective of this article is to propose how to enhance P&L for management purposes by adding information above the ‘top line’; present model which enables properly analyse merchandising and sales growth related decisions. Integration of Pricing analyses, cost variance analyses, factor analyses and traditional financial ratios analyses is the method used to create the model which allows analysing and supporting commercial decisions