Retrograde rating
The retrograde valuation is a valuation method in accounting with which the acquisition costs can be calculated backwards from the sales price. The method is used in particular when a raw material is converted through processing such that sales products of the most varied of characteristics are created and are accordingly sold at very different prices. Examples of this can be found in the food industry.
The retrograde valuation in property valuation refers to the process that a property is to be valued on a previous valuation date - the expert has to return to the level of knowledge that he could have had on the previous valuation date.
method
If the acquisition costs cannot be determined directly, since the sales prices are sometimes already shown in purchasing, for example in the retail business, this evaluation method offers the possibility of a subsequent determination.
The average gross profit margin is deducted from the given sales prices, so that the acquisition costs remain as the residual value. Any price reductions received in purchasing must also be taken into account and have a reducing effect on the acquisition costs.
example
- Selling price of a carpet: 5000 €
- Average gross profit premium: 70%
- Discounts received: 10%
The acquisition costs after deducting the gross profit would therefore be 5000 / (1 + 0.7) = € 2941.18. However, since the price reductions received must be deducted from this, the final acquisition costs are 2941.18 * (1-0.1) = 2647.06 €.