The markdown percentage cannot be calculated directly from the operating statement.
As shown in the fifth item of Figure B–2, the numerator of the markdown percentage
is the total dollar markdowns. Markdowns are reductions in the prices of products
that are purchased by customers. The denominator is net sales.
Suppose The Caplow Company had a total of $700 in markdowns on the prints and
posters that are stocked and available for sale. Since the frames are custom made for
individual customers, there is little reason for a markdown there. Caplow’s markdown
percent is then: