Use Formulas to Identify Inventories and Margins

Having already set up your inventory and expenses spreadsheet, you are now ready to delve into assessing your current stock and calculating profit margins. Initially, you might consider manually counting each item or calculating differences individually using the spreadsheet data, a method that might seem manageable at the start. However, as your business expands, such an approach would quickly become impractical and time-consuming. Fortunately, Google Sheets offers a solution through the use of formulas, which streamline the process by automating calculations. This not only saves time but also reduces the likelihood of errors. Begin by inserting a formula into Column D, labeled “Current Stock.” This formula will calculate the difference between your “Original Stock” and the “Total Sold” for each item. Formulas in Google Sheets start with an equals sign. To find the current stock, subtract the number in the total sold cell from the original stock cell. For example, the formula “B2 minus C2” would be used. After pressing enter, the “Current Stock” column will display the number of items remaining in stock. To apply this formula to the entire column, click on the cell with the formula, drag the handle in the bottom right corner down to the end of your list, and then release it. The cell references will automatically adjust, providing the correct totals. Check your work carefully to ensure accuracy, as some results may be positive while others negative.

Next, apply a similar formula to calculate the profit margin for each item, a crucial indicator of your business’s financial health. A high profit margin, showing a substantial difference between cost and retail price, suggests you are pricing your products effectively while maintaining cost-efficiency. Conversely, a low margin, indicated by a narrow gap between cost and price, might prompt a reevaluation of your expenses or pricing strategy. In the “Margin” column, begin with an equals sign and then subtract the “Cost Per Unit” from the “Retail Price.” For example, use the formula “F2 minus E2.” Press enter and then extend this formula down the entire column in the same manner as before. This calculation will provide a clear picture of the profitability of each item, guiding your pricing and production decisions as you grow your online business.