If you have access to data on your particular market, you can determine your share of the market as:
Market Share = Your Company’s Sales / Total Sales in Your Market Sector
This ratio could be calculated in terms of volume of units sold, dollar value of sales, or both.
If your business involves more than one type of product, you can determine the relative importance of each product, in terms of your total sales, as:
Participation of Product A in Total Sales = Sales of Product A / Total Sales
To obtain an indication of how well you are renewing your product line, you can use the following ratio:
Level of Renewal of Product Line = Sales of New Products / Total Sales
The more information you have regarding the sales and costs of each of your own products, and the associated figures relating to your market sector, the more types of analyses you can perform.
By breaking down your actual sales by individual product, or line of products, and comparing these figures with the corresponding market figures, you can determine:
The growth of your sales of each product, period by period, and how your growth compares to the market.
Changes in your market share, by product by period.
Changes in the make-up of your sales – how much of your sales was for each product, and how is this evolving over time.
Income Statements By Product
If you have the capability to generate income statements by product, or by product lines, you will have good insight as to where resources and efforts can be allocated more efficiently and profitably. If this information is not readily available from your accounting system, you may be able to prepare pro forma income statements by product.
Certain costs may be more readily assignable to specific products than others. Costs that may be allocable by product include:
Materials and supplies
Direct labor
Manufacturing cost
Sales commissions
Advertising and publicity
By breaking down sales by product, and then allocating these direct costs, you can determine a gross margin by product. This will be helpful in showing which products are contributing the most to your bottom line.