# Why 3 Buckets???

That’s a pretty legitimate question. Why on earth did I name a blog about retail math “3 buckets blogging?”  It really does sound like it should be about farming, not teaching math.

The answer has to do with something I learned when I first started studying all the various formulas and ratios used in analyzing the performance of retail merchants. All of these formulas/ratios fall into what are basically 3 categories:  analysis of sales performance, analysis of profitability, and analysis of asset efficiency. Three categories, or three buckets of measurements.

Many of us find it easier to understand and remember multiple concepts when we can put them into logical frameworks.  That’s the idea behind the three buckets.  Think of all of those retail math formulas as being sorted into these three buckets.  For example, same store sales obviously goes into the sales bucket while inventory turnover goes into the asset efficiency bucket.

I’ve found that covering concepts this way in class helps my students better understand the relationships between the measurements.