Ecommerce and retail brands
Management accounts for ecommerce and retail brands
An ecommerce brand's management accounts should not stop at gross margin. After the cost of the goods, every order still pays for shipping, marketplace and payment fees and packaging, and the ads that brought it in. The pack needs sales by channel, returns, contribution margin, ad spend and inventory days.
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Every figure shown here is invented for illustration. Nothing on this page is computed from anyone’s accounts.
The eight measures an ecommerce pack should show
| Measure | Formula | Note |
|---|---|---|
| Sales by channel | Own website, marketplaces, wholesale | Channels carry very different costs |
| Returns rate | Returns and refunds ÷ gross sales | Fashion runs far higher than homeware |
| Gross margin % | (Net sales − cost of goods sold) ÷ net sales | Before fulfilment and fees |
| Contribution margin % | (Net sales − goods − shipping − marketplace fees − payment fees − packaging) ÷ net sales | What each sale really leaves |
| Ad spend ratio | Paid social + search advertising ÷ net sales | The blended cost of winning sales |
| Inventory days | Inventory ÷ cost of goods sold × days | Cash sitting on shelves |
| Stock in transit | Goods paid for, not yet received | Cash gone that isn't in inventory yet |
| Cash and clearing balances | Bank + processor and marketplace clearing | Money earned, not yet paid out |
What Magic MIS computes, and what you work out from its ledgers
Every month: net sales (with returns placed against sales), gross profit and its margin, inventory days, staff costs, EBITDA, cash, the current ratio and the board's runway lens. Contribution margin, the ad spend ratio, the returns rate and the split by channel aren't separate figures on the board: the channel, fee and advertising ledgers sit behind sales and costs, one click away, and the formulas above take them from there.
Five mapping traps in an online brand's books
- Clearing accounts are cash on the way, not cash. Processors and marketplaces pay out net and late; keep their clearing ledgers apart from bank.
- Returns on their own ledger, not netted off sales, or the returns rate is lost.
- Marketplace fees netted from payouts must be grossed up, or channel margins are wrong.
- Gift cards and store credit are liabilities until redeemed.
- Stock in transit is a current asset of its own, apart from stock in the warehouse.
Fernhill Goods, an invented brand, keeps 39.7% of each sale after fulfilment
From the company's trial balance over the six months to September 2026, worked by hand:
| Measure | Working | Result |
|---|---|---|
| Net sales | Website 1,286,400 + marketplaces 642,800 + wholesale 284,600 − returns 118,600 | £2,095,200 |
| Returns rate | 118,600 ÷ gross sales 2,213,800 | 5.4% |
| Gross margin | (2,095,200 − goods 884,200 − packaging 28,600) ÷ 2,095,200 | 56.4% |
| Contribution margin | (2,095,200 − 884,200 − shipping 212,400 − marketplace fees 96,400 − payment fees 42,800 − packaging 28,600) ÷ 2,095,200 | 39.7% |
| Ad spend ratio | (Paid social 186,400 + search 94,200) ÷ 2,095,200 | 13.4% |
| Inventory days | Stock 386,400 + in transit 64,800 ÷ cost of sales for July to September 2026, 473,888, × 92 | 88 days |
Packaging counts with the goods in gross margin, as the board counts it, and the inventory days are worked on the last three months, as the board works them. Inventory days are high for the season, so reorder volumes deserve a check before the next purchase run.
In Magic MIS, the same books loaded a month at a time give this board for September 2026:
Magic MIS wrote this commentary for September 2026, word for word. The AI wrote the sentences; the engine filled every figure, and each one opens to its ledgers on the board:
Performance
Revenue from operations for Sep 2026 was £392,199.76, up £28,728.23 (7.9%) on last month.
Other operating expenses were £144,207.70, an increase of £15,860.00 (12.4%). EBITDA was £33,742.34, a change of £(9,130.27) (-21.3%) on last month.
Profit before tax was £32,709.01 and profit after tax was £32,709.01, each a change of £(9,130.26) on last month (-21.8%).
Margins
Direct costs were £174,806.76, up £23,169.55 (15.3%), which grew faster than revenue.
Gross profit was £217,393.00, up £5,558.68 (2.6%). Because gross profit grew more slowly than revenue, the gross margin was lower than last month.
Working capital
Working capital was £538,800.00, up £33,022.34 (6.5%) on last month.
Inventories were £451,200.00, up £28,109.84 (6.6%). Trade receivables were £72,400.00, up £5,232.85 (7.8%). Trade payables were £142,600.00, up £7,538.04 (5.6%).
Cash and bank was £168,400.00, up £14,971.27 (9.8%).
From the trial balance to the brand's pack
- Export the trial balance from Xero, QuickBooks or your system as Excel, CSV or PDF. There is no live connection.
- Upload it. Each ledger is placed once on a line of the report, by rules first and the AI only for what the rules can't place; check the clearing accounts, returns and fulfilment costs on the ledger map.
- Get a checked Excel workbook with live formulas, a board you change by chatting, and the month written up.
- Next month, upload the new trial balance: the placing is remembered, so it is a refresh, not a rebuild.
Click any figure on the board to see its working, the month and the ledgers behind it. It is prepaid credits with no subscription, and every action shows its price before it runs; see the credit packs.
What brands ask before they upload
Can it show contribution margin by channel?
The board shows the company's figures. Where sales and channel costs sit on channel ledgers, those ledgers are in the detail behind each figure, and contribution by channel is worked out from them.
What about customer acquisition cost or repeat rate?
Those need order and customer data from your store, which isn't in a trial balance.
Our stock is only counted every quarter. Does that matter?
Each company says how its stock is valued: monthly, quarterly or yearly. Where it is counted quarterly, the board says a single month's gross profit isn't meaningful and leads with the quarter to date.
Does it connect to our store?
No. It works from the trial balance your accounting system exports.
Read next
- How do you calculate inventory days?Inventory days = closing stock ÷ the last three months' cost of sales × their days. The formula, a worked example, how stock valuation changes it, and what a rise means.Read
- How do you calculate gross margin from a trial balance?(Revenue − direct costs) ÷ revenue × 100, with closing stock taken off direct costs. A worked example showing what the stock adjustment changes, and which ledgers count.Read
- Financial dashboard from Excel: a KPI dashboard from your trial balanceA KPI dashboard built from your Excel trial balance, changed by asking in words and presented live, with every figure opening onto the ledgers it came from.Read
Build your brand's monthly pack from its trial balance
Create an account, load last month's trial balance, and get the report — paid per action.
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