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 Planned Margin \$0, but Actual \$100k
Silver Member
 posted April 20, 2008 01:52 PM
If my planned Gross Margin is \$0.00 and my Current Year Actual Gross Margin in \$100,000.00, what is target % ? How does PMF calculates it?

We are set to
Actual Numerator: Gross Margin Actual To Year
Actual Denominator: Gross Margin Plan

Thank You

...

 Posts: 32 | Location: All over US | Registered: March 12, 2008 IP
Master
 posted April 20, 2008 10:21 PM Hide Post
Actual numerator and denominator are the components of the ACTUAL. You wouldn't typically use the PLAN amount as a component of the actual. PMF will compare the calculated result of the ACTUAL to the calculated result of the PLAN. You must specify the PLAN amount as the TARGET.

If you do the calculation as you describe, and the plan is 0, and you divide by it, you are dividing by zero. As you probably remember from mathematics, any number divided by zero has an infinite - or irrational - resultant. So you don't want to do that.

It's like this. If you are calculating a measure margin, you'll typically do something like this

Actual [margin]=

([total dollar amt of sale] - [portion that is profit])
--------------------------
[total dollar amt of sale]

Target [margin] =

some percentage
----------------
1 [resulting in a counted sum, averaging the percent to balance it for aggregation purposes]

Hope this makes sense, and helps.

thanks

Bob Jude Ferrante
WebFOCUS Performance Management
Bob_Ferrante@ibi.com
917-339-5105

I'll take any questions about PMF - business or technical - anytime!

 Posts: 919 | Registered: March 26, 2003 IP