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How to Calculate Cash Margin

Sarah Barr
Sarah Barr
  • Updated

Definition:
Cash Margin represents the cash dollars generated over a specific period, measuring the difference between sales revenue and inventory inflow costs.

Formula:
📌 Sales
âž– Net Inflow (cost of inventory purchases)
âž¡ Cash Margin

This metric is essential for understanding cash flow, profitability, and financial health, helping retailers gauge how efficiently they convert inventory into cash.

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