For everyone who wants the template.... head to corporatefinancecademy.com and scroll about halfway down, you will see a box that says "Get our FREE templates!", enter your email address. After you confirm your sign-up, you will receive an email with a link to download!
THIS IS THE BEST VIDEO EVER FOUND!! Thanks man! I have been around 10 hours in 2 days trying to understand more how to tell a story behind the PVM model! and of course the Profit impact you show was the chery of the cake! Great job!
I was recently promoted to an FP&A role and had so much trouble understanding this topic. You are amazing. I’ll definitely subscribe to your month access!
How do you calculate the volume and mix impacts with the following scenarios: (1) There is no sales (thus to avg price) in the prior year for a particular item, but sales in the current year; and (2) there is no sales of a particular item in the current year, but sales in the prior year?
Thanks for the great video. Is there a slight error on the cost calculation in that it should be negative? I noticed the cost bridge doesn't walk, shouldn't the impact of increasing cost be a negative?
I was thinking the same, and wanted to ask the same question. In my opinion the cost impact on profit should be calculated instead by (LY cost/unit - CY cost/unit) * CY Qty. Like that, if the cost increases from last year to current year, the impact on profit will be negative. This should make sense in my opinion.
I do product/prce volume mix analysis for work. I’ve been doing this for a year and I’m still trying to wrap my head around this concept. You made it easy to understand and this is very helpful. Could you recommend any books or article that’ll help me further understand this concept of PVM? Thanks 😊
Overall this is a great video tutorial to understand each component. The only thing that I want to call out is the formula written on MIX has an error. It was shown as "CY Units * (PY product price/unit - PY total price/unit) * (CY product % of total units - PT product % of total units)" In your excel example, your formula is actually doing this It was shown as "CY Units TOTAL * (PY product price/unit - PY total price/unit) * (CY product % of total units - PT product % of total units)"..................the CY Units should be written as CY Units TOTAL.
@CorporateFinanceAcademy, which one is correct for Mix calc...., CY Units or CY Units Total...., this is important as it affect Volume calc too..., please!
Hey! This is a great catch! The cost as part of the walk is in the wrong color. The cost is UP!!! 0.5 year over year so the cost in the profit walk should be a pressure. If you flip the cost from a positive walking item to a negative item, the line item walk and the check are both 60. Great catch!
Hi, how do we treat the products that were sold in current year but were not sold in the previous year ? they are usually not comparable. do we add another column to calculate the non-comparable sales and profit change?
Thanks so much for doing this. I have been struggling for a couple of days with other web content explained really badly by people, and really fast. Your content was perfectly balanced and thanks for the Excel explanation where you have shown your formulas. It gives me a fighting chance to set up my own PVM analysis. Also looping in profit was great. Love your work, cheers.
Great video and thank you so much ! Please allow me to ask you the same question written in below. Why does the check (column AJ) for product B on the profit side not balanced out ? I would like to implement this excel logic into our company shortly and would like to confirm if the excel formula is 100 % correct or not. If there is some formula needs to be fixed, please let me know. Thank you in advance
Hey! This is a great catch! The cost as part of the walk is in the wrong color. The cost is UP!!! 0.5 year over year so the cost in the profit walk should be a pressure. If you flip the cost from a positive walking item to a negative item, the line item walk and the check are both 60. Great catch!
Great video, thank you so much for sharing. I'm not sure if I am too late in the game. Would you share the excel spreadsheet? I couldn't find it. Thank you!
Great video and explanation. While doing this, i ran into an issues. When using a hierarchy of products (ie: electronics>AV equipment>itemXYZ), the item level price/volume/mix does not sum up to the total of AV equipment, and likewise that does not sum up to "electonics". Am i doing something incorrectly or is that how the formula is built?
THanks for Video, have a doubt that COGS difference PY:95, CY:110 Difference is 15, but when we check the Cost Impact we have 7.5 ( and is not aligning with 15) , is there anything am i missing to understand, please clarify sir.
Hey, Saw the mix formula multiple times, especially between 8:45 and 9:00. One question though, on the logic of the part of formula. It is given below. I still couldn't fully understand why we do that? (PY Product Price/Unit) - (PY Total Price/Unit) Why do we do this? What is we just straight away took "PY Total Price/Unit" instead? I mean anyway, we will be adjusting the mix from Volume. So, while validating the final value; it will come the same, right? Total Value CY - Total Value PY = Price Effect + Mix Effect + Vol. Effect. Apologies for the trouble and taking away your time..
Do you have examples how you do this if for example you just have sales and gross profit (just be able to do mix and margin I think)? Also do you have example of how you would bridge % margin over time if you have again just sales and gross profit by sku?
Thanks for the video. I am very comfortable with the MIX calculations and explaining the dilutive impacts of lower priced brands etc. What I am struggling with is how to better explain the remaining volume variance by brand. I am often left numbers that don't make much sense. I am comfortable they are right, but need help explaining to users what they (the volume variance minus mix) mean.
Quick question : I dont get why for the price effect you take the current year units sold instead of the previous years. It seems counterintuitive because if you take the current year units you are taking into account the volume effect (ie. change in units sold from previous year) ? Intuitively I would take the previous year units sold and mutiply it by the change in Price per unit to isolate the price effect. I am missing something ? Thanks
you calculate how much the increase in price is on a per unit basis. Think about a super simple example with no mix. in year 1 you sell 10 units at $5 each, in year 2 you sell 12 units at $6 each. To get volume you would do 12 - 10 = 2 incremental units sold at last years price (2 * $5 = $10). To get Price you would find the per unit price difference ($6-$5 = $1) times current year volume ... $1 * 12 units = $12. ..... So the volume impact is $10 and the price impact is $12, for a total variance of $22. (last year sales of 10 units at $5/unit = $50 ... this year sales of 12 units at $6/unit = $72.... $72 - $50 = $22). Make sense? The PURE volume is the fact that you went up 2 units at last years price. The PURE price impact is $1 for every unit you sold this year.
yes - go to our website at corporatefinanceacademy.com and you will see on the homepage a place to enter your e-mail. When you do that you will automatically receive an email with a link to download the template!
Sorry. I really appreciate you watching the video. Please take a look in the comments as I may have already answered this. You can also download the file from the site to see the details!
Thank you for the video! Please could you explain why for volume contribution, you multiply the change by unit price [PY] but for price contribution you multiply the change by sales volume [CY]? I don't understand the logic for one being [CY] and the other [PY]. Many thanks.
Unfortunately, I don't have time to answer every question on here, but very much appreciate you watching the video. Often, I have already answered questions in the comments so check out there. If you become a paying member on our site, I am available for custom questions!
Hi, great tutorial. Really helpful! I just have a question regarding the mix analysis. Why exactly is it that we use the previous year's product and total prices to calculate the magnitude of the mix effect? (I mean why we use 25-14.3 for product A and not 27-12) Doesn't that mix the year over year change in price with the mix impact?
Good question! If you used the current year price you would be convoluting the price and mix impacts. By calculating the change in mix then using last year's price you are keeping the mix impact isolated.
@@banamaskoun7634 it isolates price from mix (you only use units which is unaffected by price). If you then jump forward to the volume calculation you can see we calculate volume change and then subtract out the mix impact! Makes sense?
Thank you so much for such explanation! Please, could you answer - when we calculate price per unit, do we need to use net sales, not gross sales? as I have promo and special trading terms (and, in my situation this is Gross Sales minus Promo minus trading terms = Net Sales). thank you so much in advance! your answer is valuable for me.
Thanks a lot for the great video and for the template. Is it possible to have a file of formulas, key points you used through the slides in this video? Really appreciate that.
if you go to the website and sign-up in the box where it says something like "get the free template" once you sign-up you will get an email giving you a link... that link will let you download it!
Variance analysis could be this year vs. last year, budget vs. actual, or another difference. It really just means analyzing one set of numbers vs. another. Make sense?
Hi Great Video over PVM analysis just have one question why we need to substract the mix effect while calculating the volume impact. If we are studying a single product but it has different sub products then calculation is done over the single product the how the mix is affecting the volume.
depends on what you are trying to get to, but if you were using this template you could effectively create multiple products. Product 1 - online, Product 1- in-store, Product 2 - online, Product 2 - in-store, Product 3.... etc... make sense? that's just one way, but it depends on what you are trying to do.
Hi, I used your formula on my data and I'm missing something on MIX. All of a sudden V6 and W6 are calculated and I think you're using an average of V4 & 5, as well as W4 &5. My calculations are coming out funky because you didn't show exactly how to calculate the 14.3 and 12.0 (it's not an average). Can you please explain? Thank you!!!
if you go to the website and sign-up in the box where it says something like "get the free template" once you sign-up you will get an email giving you a link... that link will let you download it!
I think I answered this in the comments already, but sure to take a look! (I believe it was an error on the spreadsheet which is fixed if you download it)
Hi Sir, I subscribed today. I need to PVM for Current YTD Plan vs Current YTD Actual. Is it as simple as replacing the PY info with Current Year Plan info ? Will Volume comingle with mix, if I replace PY with Plan info?
Hi! Great tutorial. I have one question regarding the price variation calculation. Why does it use the current year volume and not the previous year?. My understating is that by doing so, there is a portion that is mixed with volume variation. Thanks!
Hi! I have subscribed to the list but after this comment and the first batch of templates that I understand you shared with other subscribers. Could you please share the template with me as well?
Do you have any advice on how to handle PVM mix on incredibly complicated product portfolios? What if the portfolio contains products that have drastically different units of measure (e.g. m^2 vs gal, vs. linear-feet, vs. package). It seems that if sales $'s is the common denominator for all products that Volume and Mix can't really be split apart.
I love your video but me as non finance background your video and way seems a bit skipped for me. The part at a check i want to know and then Cost Impact on sale is zero too. Could please give me a reply on this part. Thank you in advance.
hello - cost doesn't impact sales. If you had sales of 100 and cost of 50, you would have margin of 50. If cost changes to 48, that has no impact on sales, but it would change your margin to 52. Make sense?
yes - go to our website at corporatefinanceacademy.com and you will see on the homepage a place to enter your e-mail. When you do that you will automatically receive an email with a link to download the template!
Where can I find a deeper understanding of the formulas rather than just taking what the video says and implement bluntly? I really want to understand the logic behind formulas.
Hi!! ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-boMhDeQGWts.html About this great video. Congrats to the job. In the end of the class, he told about get access to the excel file template. Is this possible?
Just a question, if you take a look @ profit bridge of product B seems that the final results is 75 instead of 60, differently of the product A, that tie. Coud you please confirm it
