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Security

Security. Lesson 9. Objectives. Calculate shrinkage based on merchandise book value and physical inventory counts Give examples of internal and external theft Explain the importance of conducting a physical inventory in terms of loss prevention

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Security

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  1. Security Lesson 9

  2. Objectives • Calculate shrinkage based on merchandise book value and physical inventory counts • Give examples of internal and external theft • Explain the importance of conducting a physical inventory in terms of loss prevention • Explain how rearranging products in a store can lead to a decrease in shoplifting • Use financial statements to determine expenses related to security and the impact on profit

  3. How Theft Affects a Business • Causes significant expenses for retailers • Referred to as inventory shrinkage • Shoplifting, employee theft, inaccurate paperwork, damaged or misplaced merchandise, and vendor error • Estimated that U.S. retailers lose over 41 billion dollars a year due to theft • 41,000,000,000

  4. Determining Shrinkage • Calculated by performing a physical inventory • Conducted usually once or twice a year

  5. Types of Theft • External Theft: • Shoplifting • Internal Theft: • Silly Scan • Garbage

  6. Loss Prevention • Preventing Shoplifting: • Layout of your store • Employees trained in how to spot shoplifters • Security devices • Locked display cases • Height markers along the door

  7. Preventing Employee Theft: • Check and verify previous employment and references • Drug testing • Employees enter and exit through one assigned door • Cameras

  8. Key Math Concepts • Compute Shrinkage in Dollars • Shrinkage in Dollars = Merchandise Book Value – Physical Inventory Value • Compute Shrinkage as a Percentage of Sales • =(Merchandise Book Value – Physical Inventory Value) / Sales Between Physical Inventories

  9. Math #2 • Womens Sportswear: • ($907,340-$875,435)/$1,637,270= • ($31,905)/$1,637,270= • .0195 • 1.95%

  10. Math #3 • Quarter = 3 months • $875,495*.025= $21,887 / 3 = $7,295.79/mth • 11 hours * 7 days/week = 77 hours/week • 77 * 4 weeks in a month = 308 hours/month • 308 * $7.50 = $2,310 • $7,295.79 - $2,310 = $4,985.79 • Security System is well worth it!!!!

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