Profit Action Plan Sample--2016 99999
Includes the Profit Toolkit
Confidentially Prepared by Profit Planning Group
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Profit Planning Group
April 29, 2016
Dear Participant, Thank you for participating in this year’s survey. The following document is a confidential report comparing your firm to other participating firms. Every effort has been made to present an accurate and comprehensive comparison. The professional analysts working on this project exercised the utmost care processing and analyzing the data. However, since the supplied data were not necessarily based on audited financial statements, we cannot make any warranties concerning the results in this report. The report can only be as accurate as the data your firm provided. Any blank values resulting from incomplete information are shown as not available (N/A). If you choose, you may submit revisions and the report will be reprocessed. The fee for reprocessing is $200 per fiscal year payable directly to Profit Planning Group. If you have any questions, please call or contact us at
[email protected].
Sincerely, Profit Planning Group th
1790 38 Street, Suite 204 Boulder, Colorado 80301 303.444.6212 v 303.444.9245 f www.profitplanninggroup.com
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Contents Introduction ............................................................................................................................................ 1 Performance Scorecard ......................................................................................................................... 2 Summary Financial Results.................................................................................................................... 3 Graphical Analysis ................................................................................................................................. 4 Return On Investment ............................................................................................................................ 7 Income Statement.................................................................................................................................. 8 Balance Sheet ....................................................................................................................................... 9 Financial Ratios ................................................................................................................................... 10 Asset Productivity ................................................................................................................................ 11 Growth & Cash .................................................................................................................................... 12 Employee Productivity.......................................................................................................................... 13 Operations ........................................................................................................................................... 14 Projects................................................................................................................................................ 15 Revenue .............................................................................................................................................. 16 Showrooms & Marketing ...................................................................................................................... 17 Marketing Methods .............................................................................................................................. 18 Trends ................................................................................................................................................. 19 An Action Program............................................................................................................................... 22 Profit Toolkit......................................................................................................................................... 23
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Introduction This report is designed to help your firm strengthen its financial position by providing an analysis of your firm’s financial performance in comparison to the performance of similar participating firms.
Methodology •
Data Collection Surveys were distributed to collect detailed financial and operating data. Completed surveys were returned directly to Profit Planning Group for analysis. Individual responses were kept strictly confidential by Profit Planning Group. No one from CEDIA or any other firm had access to any individual firm’s survey or results.
•
Medians Most of the figures presented in this report are based on medians. A median is the middle value in the sorted list of all reported values. Unlike averages, medians are not influenced by extreme values and, therefore, best represent a typical firm’s results.
•
Net Revenue References to revenue in this report refer to net revenue which is gross revenue less purchase rebates and discounts allowed to customers.
•
Owners’ Discretionary Profit The Owners’ Discretionary Profit (ODP) referred to in this report is the reported sum of profit before taxes plus all owners' compensation and benefits including owners' direct labor, salary, wages, bonus, commission, payroll tax, insurance, retirement, payments made to or for owners for expenses unrelated to the firm like loans, personal vehicle, legal, travel, entertainment, and other amounts beyond normal operating expenses. ODP% is ODP expressed as a percentage of revenue i.e. ODP ÷ revenue x 100.
•
The High-Profit Group The high profit results present a typical participant within the group of high profit participants. This group includes participants with the top ODP% among those with revenue over $1,000,000.
•
The N/A Label Throughout this report, “N/A” designates results which are not available due to small samples.
Results Results from the CEDIA Benchmark Survey Report were selected specifically for your firm to provide comparisons with similar firms. The following columns of median-based results are presented. •
Typical HTP presents a typical firm among all participating firms.
•
High Profit HTP shows a typical firm within the high-profit group.
•
Revenue $500,000 - $2 Mil. presents a typical firm in this revenue range.
•
Avg. Proj. $7,500 - $20,000 shows a typical firm with an average project in this range.
•
Your Firm presents the figures reported for your firm. If any direct labor component of owners’ salary was reported then adjustments were made to account for it in Cost of Goods Sold.
Profit Toolkit™ The Profit Toolkit™ provides tools in an Excel spreadsheet which help you easily test and plan improvements to increase your firm's profitability.
Performance Scorecard The performance scorecard on the next page graphically shows your firm’s standing in relation to participating firms. This standing is your percentile rank for an item among all values reported for the item. Ranks are classified into four quartiles labeled INSPECT, FAIR, GOOD, and STRONG. INSPECT does not necessarily indicate a problem but the majority of firms report higher results. These items may require a more detailed analysis within your firm. © 2015 Profit Planning Group, Inc.
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Performance Scorecard © 2015 Profit Planning Group, Inc. 99999 Income Statement
Your Firm
Net Revenue ($000s)
1,200
Revenue Change %
20.0
Equipment Cost %
41.7
Subcontractor Cost %
3.3
Direct Labor Cost %
14.2
Cost of Goods %
60.0
Gross Margin %
40.0
G&A Payroll Expense %
14.2
Occupancy Expense %
3.8
Other Operating Expense %
11.2
Total Operating Expense %
29.2
Operating Profit %
10.8
Pre-Tax Profit Margin %
10.4
All Owners' Comp. & Benefits
Your Firm Compared With All Participants
Inspect
Fair
Good
Strong
6.7
Return Owners' Discretionary Profit %
17.1
Owners' Discretionary Profit $
205,142
ODP Return On Assets %
41.0
ODP Return On Net Worth %
70.7
Performance Ratios Revenue $ per Project
18,305
Equip. Gross Margin
40.5
Labor Gross Margin
12.5
Current Ratio
1.5
Quick Ratio
0.9
Financial Leverage
1.7
Debt to Equity
0.7
Asset Turnover
2.4
Accounts Receivable Days Inventory Turnover Invetory Holding Days
45.6 4.3 83.9
Employee Productivity Revenue $ per G&A Emp.
240,000
Gross Profit $ per G&A Emp.
96,000
Payroll $ per G&A Emp.
68,000
Direct+G&A Payroll % 99999
28.3 2
© 2015 Profit Planning Group, Inc.
Summary Financial Results Typical HTP
High Profit HTP
Your Firm
1,000,000
2,079,000
1,200,000
Strategic Profit Model Ratios Profit Margin (pre-tax %) Asset Turnover Return on Assets (pre-tax %) Financial Leverage Return on Net Worth (pre-tax %) ODP Return on Assets (pre-tax %) ODP Return on Net Worth (pre-tax %)
6.8 3.5 23.8 2.4 57.1 52.5 89.3
14.5 3.0 43.5 2.2 95.7 80.3 100.9
10.4 2.4 25.0 1.7 43.2 41.0 70.7
Revenue Trend 2013 to 2014 Revenue Change % 2014 to 2015 Revenue Change % Forecast
10.4 15.0
12.5 9.9
20.0 -16.7
100.0
100.0
100.0
43.3 1.6 16.2 0.4 61.5 38.5
43.5 1.4 15.5 0.1 60.5 39.5
41.7 3.3 14.2 0.8 60.0 40.0
16.8 3.0 11.7 31.5 7.0 0.0 0.2 0.0 6.8 8.3 15.1
13.9 2.9 8.2 25.0 14.5 0.1 0.1 0.0 14.5 8.3 22.8
14.2 3.8 11.2 29.2 10.8 0.1 0.4 0.1 10.4 6.7 17.1
151,000
474,012
205,142
Gross Margin (% of revenue) Equipment Gross Margin Labor Gross Margin (incl. service)
33.9 28.5
30.9 25.7
40.5 12.5
Financial Ratios Current Ratio Quick Ratio Debt to Equity Accounts Payable to Inventory % Accounts Payable Payout Period (days) EBIT to Total Assets % Times Interest Earned Average Collection Period (days) Inventory Turnover (times)
1.5 1.0 0.8 33.3 17.4 21.1 15.8 14.7 5.8
1.7 1.6 1.0 22.2 13.8 37.7 32.7 30.4 5.6
1.5 0.9 0.7 26.1 21.9 26.0 26.0 45.6 4.3
183,333 65,859 54,825 33.0 43.6
203,238 82,757 55,715 29.4 35.2
240,000 96,000 55,000 28.3 35.4
Typical Net Revenue $
Income Statement (% of revenue) Net Revenue Cost of Goods Sold Equipment Subcontractor Costs Direct Labor Salary, Wage, Tax & Benefits Other Costs Total Cost of Goods Sold Gross Margin Operating Expenses G&A Personnel Expenses Occupancy Expenses Other Operating Expenses (overhead) Total Operating Expenses Operating Profit Other Income Interest Expense Other Non-operating Expenses Profit Before Taxes All Owners' Compensation & Benefits Owners' Discretionary Profit Owners' Discretionary Profit $
Employee Productivity Revenue $ per G&A Employee Gross Profit $ per G&A Employee Salary $ per G&A Employee Direct + G&A Payroll Expense (%) Personnel Productivity Ratio (%) © 2015 Profit Planning Group, Inc.
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Graphical Analysis Owners' Discretionary Profit (%)
15.1
22.8
15.8
13.8
17.1
Typical HTP
High Profit HTP
Revenue $500,000 - $2 Mil.
Avg. Proj. $7,500 $20,000
Your Firm
Owners' Discretionary Profit ($)
99999
151,000
474,012
157,122
135,516
205,142
Typical HTP
High Profit HTP
Revenue $500,000 - $2 Mil.
Avg. Proj. $7,500 $20,000
Your Firm
4
© 2015 Profit Planning Group, Inc.
Graphical Analysis Revenue per Project ($)
10,054
19,035
10,532
10,685
18,305
Typical HTP
High Profit HTP
Revenue $500,000 - $2 Mil.
Avg. Proj. $7,500 $20,000
Your Firm
Revenue Change from Previous Year (%)
10.4
12.5
11.6
9.5
20.0
Typical HTP
High Profit HTP
Revenue $500,000 - $2 Mil.
Avg. Proj. $7,500 $20,000
Your Firm
© 2015 Profit Planning Group, Inc.
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Graphical Analysis Gross Margin Total Expenses
Gross Margin & Operating Expenses (%)
Typical HTP
39.5
25.0
High Profit HTP
38.6
32.0
Revenue $500,000 - $2 Mil.
38.8
32.4
Avg. Proj. $7,500 $20,000
Revenue $500,000 - $2 Mil.
6
71,436
194,859
65,859
196,400
82,757
203,238
65,859
183,333
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High Profit HTP
29.2
Your Firm
Revenue per Employee Gross Profit per Employee
Revenue & Gross Profit per Employee ($)
Typical HTP
40.0
Avg. Proj. $7,500 $20,000
96,000
31.5
240,000
38.5
Your Firm
© 2015 Profit Planning Group, Inc.
Return On Investment The Strategic Profit Model examines the return on the investment made in your firm and analyzes the factors contributing to that return. The model assumes the primary objective is to achieve a desirable rate of return on owners' investment, commonly referred to as Return On Net Worth (RONW) or Return On Equity. There are five components to the basic Strategic Profit Model. Your results are shown below. Path 1 Profit Margin 10.4%
Path 2 Asset Turnover X
Profit Before Taxes Net Revenue
2.4 Net Revenue Total Assets
=
25.0%
Return on Net Worth
Path 3 Financial Leverage
Return on Assets X
Profit Before Taxes Total Assets
1.7 Total Assets Net Worth
=
43.2% Profit Before Taxes Net Worth
The Strategic Profit Model Two of the components in the model represent return on investment. Return On Assets = Profit Before Taxes ÷ Total Assets x 100 Return on assets (ROA) is the direct result of the first two components or pathways; profit margin multiplied by asset turnover. The pre-tax return on assets ratio should at least equal the cost of capital. For your company ROA is 25.0 percent. Return On Net Worth = Profit Before Taxes ÷ Net Worth x 100 Return on net worth (RONW) is a return on investment ratio based on net worth or owners' investment in the business. You should strive for a RONW at least exceeding the return available on risk-free investments plus an incremental rate offsets both inflation and risk. It should also provide adequate funds to provide for the growth of the business. Your firm has a RONW of 43.2 percent which means for every $1.00 of net worth, the firm produced 43.2¢ of profit before taxes. The two return on investment ratios are driven by three performance ratios, each representing a different profitability pathway. Path 1: Profit Margin = Profit Before Taxes ÷ Net Revenue x 100 The most important profitability pathway is profit margin management. A profit margin of 10.4 percent means for every $1.00 of revenue the company was able to produce 10.4¢ in profit before taxes. Path 2: Asset Turnover = Net Revenue ÷ Total Assets The asset turnover ratio measures asset productivity, or how many dollars of revenue your company generates per dollar invested in assets. The ratio of 2.4 means the firm is able to generate $2.40 in revenue for every $1.00 in assets. Usually, asset turnover is improved by increasing inventory turnover and by collecting accounts receivable faster. Path 3: Financial Leverage = Total Assets ÷ Net Worth Financial leverage measures the extent to which the firm uses outside (non-owner) financing. The higher the ratio, the more the firm relies on outside financing. The ratio of 1.7 times suggests for every $1.00 in net worth, the firm had $1.70 in total assets. If for every $1.70 in total assets the owners put up $1.00, then outsiders put up the remaining $0.70. High Profit HTP
Typical HTP Strategic Profit Model Ratios Profit Margin (pre-tax %) Asset Turnover Return on Assets (pre-tax %) Financial Leverage Return on Net Worth (pre-tax %) ODP Return on Assets (pre-tax %) ODP Return on Net Worth (pre-tax %) © 2015 Profit Planning Group, Inc.
6.8 3.5 23.8 2.4 57.1 52.5 89.3
14.5 3.0 43.5 2.2 95.7 80.3 100.9 7
Revenue $500,000 $2 Mil. 6.6 3.6 23.8 2.6 61.9 61.6 102.3
Avg. Proj. $7,500 $20,000
Your Firm
6.4 3.2 20.5 2.2 45.1 53.0 90.0
10.4 2.4 25.0 1.7 43.2 41.0 70.7 99999
Income Statement The income statement provides a detailed perspective on your firm's ability to: • • • •
Generate adequate revenue Produce the revenue at a reasonable gross margin Control the expenses associated with the revenue Ultimately produce a profit
In analyzing the revenue to profit process it is essential to note how important very small changes can be. For your firm, every one percent change in gross margin or operating expenses results in a change in profit before taxes of $12,000. High Profit HTP
Typical HTP Firms Reporting Typical Net Revenue $
Revenue $500,000 $2 Mil.
Avg. Proj. $7,500 $20,000
53
13
27
23
1,000,000
2,079,000
994,444
982,000
Your Firm 1,200,000
Income Statement (% of net revenue) Net Revenue
100.0
100.0
100.0
100.0
100.0
Cost of Goods Sold Equipment Subcontractor Costs Direct Labor Salary, Wage, Tax & Benefits Other Costs Total Cost of Goods Sold
43.3 1.6 16.2 0.4 61.5
43.5 1.4 15.5 0.1 60.5
44.3 1.6 15.2 0.3 61.4
43.7 1.7 15.0 0.8 61.2
41.7 3.3 14.2 0.8 60.0
Gross Margin
38.5
39.5
38.6
38.8
40.0
G&A Personnel Expenses Owners' Salary & Bonus Sales Salary, Wage, Bonus & Commission All Other G&A Salary, Wage, Bonus & Comm. Total Salaries, Wages & Bonuses Payroll Taxes (G&A FICA, workers’ comp. & unemp.) Benefits (G&A fringes, health ins., retirement, etc.) Total G&A Personnel Expenses
6.9 4.4 3.3 14.6 1.4 0.8 16.8
6.5 2.1 3.3 11.9 1.3 0.7 13.9
7.6 4.9 3.3 15.8 1.4 0.9 18.1
6.7 6.9 1.0 14.6 1.4 0.6 16.6
3.1 5.0 3.3 11.5 1.9 0.8 14.2
0.5 0.1 2.4 3.0
0.3 0.2 2.4 2.9
0.5 0.1 2.2 2.8
0.6 0.1 2.4 3.1
0.4 0.4 3.0 3.8
Other Operating Expenses (overhead) Advertising & Promotion Warranty Work IT & Communications Vehicle Insurance Depreciation & Amortization All Other Operating Expenses (overhead) Total Other Operating Expenses (overhead)
1.2 0.0 1.2 3.1 1.2 0.8 4.2 11.7
0.4 0.0 1.0 2.4 0.4 0.4 3.6 8.2
1.2 0.0 1.1 2.9 1.1 0.5 4.3 11.1
1.2 0.0 1.6 3.4 1.4 1.0 4.1 12.7
0.8 0.4 2.2 1.1 0.3 0.5 5.7 11.2
Total Operating Expenses
31.5
25.0
32.0
32.4
29.2
Operating Profit Other Income Interest Expense Other Non-operating Expenses Profit Before Taxes All Owners' Compensation & Benefits Owners' Discretionary Profit
7.0 0.0 0.2 0.0 6.8 8.3 15.1
14.5 0.1 0.1 0.0 14.5 8.3 22.8
6.6 0.0 0.0 0.0 6.6 9.2 15.8
6.4 0.0 0.0 0.0 6.4 7.4 13.8
10.8 0.1 0.4 0.1 10.4 6.7 17.1
151,000
474,012
157,122
135,516
205,142
Occupancy Expenses Utilities (heat, light, power, water) Building Repairs & Maintenance Rent or Real Estate Ownership Total Occupancy Expenses
Owners' Discretionary Profit $ 99999
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© 2015 Profit Planning Group, Inc.
Balance Sheet The balance sheet reports where a company's money is invested and how the investment is financed. The balance sheet is a picture of financial position at a specific moment in time.
Typical HTP
High Profit HTP
Revenue $500,000 $2 Mil.
Avg. Proj. $7,500 $20,000
Your Firm
285,714
693,000
276,234
306,875
500,000
Assets Cash & Marketable Securities Trade Accounts Receivable Inventory Other Current Assets Total Current Assets Total Fixed & Noncurrent Assets Total Assets
24.0 26.1 22.9 1.6 74.6 25.4 100.0
26.1 30.8 10.8 1.6 69.3 30.7 100.0
26.5 30.2 22.9 2.0 81.6 18.4 100.0
22.6 17.9 18.3 4.7 63.5 36.5 100.0
4.0 30.0 23.0 1.0 58.0 42.0 100.0
Liabilities and Net Worth Accounts Payable Customer Deposits Service Contracts & Extended Warranties Notes Payable Other Current Liabilities Total Current Liabilities Long Term Liabilities Net Worth or Owner Equity Total Liabilities & Net Worth
11.7 19.1 0.0 0.7 10.4 41.9 15.6 42.5 100.0
8.5 1.3 0.0 0.0 16.1 25.9 27.6 46.5 100.0
10.5 17.1 0.0 1.9 14.7 44.2 17.4 38.4 100.0
14.3 13.1 0.0 1.3 11.5 40.2 13.8 46.0 100.0
6.0 1.0 1.0 20.0 12.0 40.0 2.0 58.0 100.0
Typical Total $ Assets Balance Sheet (% of assets)
© 2015 Profit Planning Group, Inc.
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Financial Ratios Suppliers, bankers and outside creditors have a wide range of financial ratios at their disposal to assess lending risks. The ratios on this page are often used to determine asset financing needs. Current Ratio = Current Assets ÷ Current Liabilities Current assets produce the cash to pay current liabilities. Therefore, the greater the safety margin of current assets you have with respect to current liabilities, the greater your ability to pay these liabilities. The traditional comfort level for the current ratio is about 2.0. At this level, a company has $2.00 of assets which can be turned into cash for every $1.00 of current liabilities. Quick Ratio = (Cash + Accounts Receivable) ÷ Current Liabilities The quick ratio measures a company's ability to pay its current liabilities from its most liquid assets, assets which can be quickly converted to cash to pay bills. Inventory is the least liquid current asset and is excluded from this calculation. A quick ratio of at least 1.0 reflects traditional thinking regarding liquidity. Accounts Payable To Inventory = Accounts Payable ÷ Inventory x 100 This ratio measures the amount of inventory which is financed by the suppliers of that inventory. The higher the ratio, the more the company is capitalizing on interest-free financing. Accounts Payable Payout Period = Accounts Payable ÷ (Cost Of Goods Sold ÷ 365 Days) This ratio measures the timeliness of paying suppliers. The challenge is to pay promptly enough to take full advantage of cash discounts and maintain a sound credit rating, yet negotiate the best terms possible to make effective use of this interest-free source of capital. Debt To Equity = Total Liabilities ÷ Net Worth The greater the proportion of its financing which is obtained from owners, the less worry the company has in meeting its fixed obligations. At the same time excessive reliance on owner financing slows the rate at which the firm can grow. The debt to equity ratio shows the balance which management has struck between debt and owners' equity. A mix of $1.00 debt to $1.00 equity is usually considered prudent. EBIT To Total Assets = Earnings Before Interest And Taxes ÷ Total Assets x 100 EBIT to Total Assets provides a profitability analysis based on operating earnings, before interest and income taxes. This ratio is best compared with a company's annual rate on borrowed funds. If a firm's EBIT to Total Assets ratio is higher than its cost of capital, it can afford to use debt to finance expansion. Times Interest Earned = (Profit Before Taxes + Interest) ÷ Interest This ratio measures the number of times earnings before interest and taxes will cover interest payments on debt. It also shows the level to which income can decline before a firm is unable to meet its interest obligations.
Financial Ratios Current Ratio Quick Ratio Accounts Payable to Inventory % Accounts Payable Payout Period (days) Debt to Equity EBIT to Total Assets % Times Interest Earned 99999
Typical HTP
High Profit HTP
Revenue $500,000 $2 Mil.
Avg. Proj. $7,500 $20,000
Your Firm
1.5 1.0 33.3 17.4 0.8 21.1 15.8
1.7 1.6 22.2 13.8 1.0 37.7 32.7
1.6 1.1 27.8 11.0 0.7 26.5 15.8
1.6 0.8 36.4 13.3 1.0 19.7 15.8
1.5 0.9 26.1 21.9 0.7 26.0 26.0
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© 2015 Profit Planning Group, Inc.
Asset Productivity Asset productivity ratios measure the effectiveness of the firm in managing inventory and accounts receivable. The ratios reveal the amount of revenue and gross margin which the assets generate and how long assets are being held and are unavailable to meet cash obligations. Average Collection Period = Accounts Receivable ÷ (Credit Sales ÷ 365 Days) This ratio measures the average number of days it takes to collect cash from credit sales (accounts receivable). Generally the collection period should not exceed one and one-third times your regular credit terms. That is, if your terms are Net 30, the collection period should not exceed 40 days. Inventory Turnover = Cost Of Goods Sold ÷ Average Inventory Inventory is one of the most controllable asset investments. Inventory turnover is an indication of the velocity with which inventory investment moves through the business. Cost of Goods does not include direct labor. Inventory Holding Period = 365 Days ÷ Inventory Turnover The inventory holding period reflects how many days of inventory are on hand. Managers and owners must be concerned with a holding period which is longer than necessary due to the high costs of capital tied up in excess inventory. On the other hand, reducing inventory levels too much could result in lost revenue if certain products are not available when the customer wants them. Sales To Inventory Ratio = Net Revenue ÷ Average Inventory At Cost The sales to inventory ratio is another method for measuring inventory performance. It measures the dollars of revenue which are generated from each dollar the firm has invested in inventory. Gross Margin Return On Inventory = Gross Profit ÷ Average Inventory x 100 GMROI measures the dollars of gross margin which are being produced by each dollar invested in inventory. The ratio may also be calculated by multiplying the gross margin percentage times the sales to inventory ratio. Combining these two measures in GMROI enables the firm to consciously consider the trade-off between gross margin and inventory utilization. Typical HTP
High Profit HTP
Revenue $500,000 $2 Mil.
Avg. Proj. $7,500 $20,000
Your Firm
Average Collection Period (days)
14.7
30.4
20.2
17.8
45.6
Inventory Inventory Turnover (times) Inventory Holding Period (days) Sales to Inventory Ratio (times) Gross Margin Return on Inventory (%)
5.8 62.9 10.4 365
5.6 65.6 10.2 539
8.3 44.4 11.9 451
5.8 63.2 10.3 437
4.3 83.9 7.2 290
Asset Productivity
© 2015 Profit Planning Group, Inc.
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Growth & Cash Most firms are anxious to expand their revenue base. As they do so, however, cash flow becomes a major issue. Ideally, firms would like to have enough cash to fund expansion and to provide a buffer in the event of a cyclical slowdown in the industry. At the same time, no firm wants to have excessive cash balances remaining idle. This section examines cash sufficiency utilizing a number of ratios, most of which are not well understood. The ratios will examine how fast the firm can grow, the cash flow required by additional revenue growth and ways to enhance growth with existing cash balances. Growth Potential Index = Profit After Taxes ÷ (Accounts Receivable + Inv. - Accounts Payable) The Growth Potential Index (GPI) measures approximately how fast the firm can increase its revenue each year using only internally generated funds. Increasing revenue faster than the growth potential index will necessitate additional borrowing. Increasing revenue slower than the growth potential index will create additional cash reserves. Cash Cycle = Average Collection Period + Inv. Holding Period - Accounts Payable Payout Period The cash cycle determines the number of days of investment in a product from the time it is purchased from the supplier until the sales invoice is collected from the customer. Anything which can be done to shorten this period facilitates revenue growth without an additional outside investment. All three of the components of this ratio were covered on the preceding two pages. Cash To Current Liabilities = Cash ÷ Current Liabilities x 100 This is the most stringent test of the ability of the firm to meet short-term obligations with existing cash balances. To be truly conservative with cash, this ratio should be in the ten to twenty percent range. Defensive Interval = Cash ÷ (Operating Expenses Other Than Depreciation ÷ 365 Days) The defensive interval measures how long the firm can operate using nothing but existing cash balances. It provides a worst-case analysis of the adequacy of the firm’s cash position if revenue and collections suddenly deteriorated. Ideally this ratio should be ten days or more. Sales To Working Capital = Net Revenue ÷ (Current Assets - Current Liabilities) Sales to working capital measures the ability of the firm to generate revenue without tying up high levels of investment in working capital. A ratio of 5.0, for example, means the firm can generate $5.00 in revenue for every $1.00 invested in working capital. This ratio can be impacted by changes in any of the three working capital items—improving inventory turnover, reducing accounts receivable collections or obtaining more favorable accounts payable payment terms. Typical HTP
High Profit HTP
Revenue $500,000 $2 Mil.
Avg. Proj. $7,500 $20,000
Cash Flow Cycle (days) Average Collection Period Plus Inventory Holding Period Gross Cash Flow Minus A/P Payout Period Cash Cycle
14.7 62.9 77.6 17.4 60.2
30.4 65.6 96.0 13.8 82.2
20.2 44.4 64.6 11.0 53.6
17.8 63.2 81.0 13.3 67.7
45.6 83.9 129.6 21.9 107.7
Growth & Cash Sufficiency Growth Potential Index (%) Cash to Current Liabilities (%) Defensive Interval (days) Sales to Working Capital
28.8 52.2 48.6 6.6
97.6 73.2 122.6 8.0
43.0 26.3 42.2 8.5
28.8 45.1 58.0 10.8
42.6 10.0 21.2 13.3
99999
12
Your Firm
© 2015 Profit Planning Group, Inc.
Employee Productivity Employees are the lifeblood of any organization. Without a properly motivated and compensated workforce, few firms can produce much more than basic levels of performance. However, as mentioned earlier, employee payroll costs make up the single largest expense category on the income statement. In controlling employee payroll, the key to success is not the absolute level of compensation, but rather compensation in relationship to the productivity of employees. Revenue Per Employee = Net Revenue ÷ Total Full-Time Equivalent Employees The revenue generated per employee are a crucial factor when analyzing ways to improve profitability. Technology utilization, innovative management systems, incentive compensation plans, and the elimination of redundant or inefficient functions most dramatically influence employee productivity. Personnel Productivity Ratio = Payroll Expense ÷ Gross Margin x 100 The personnel productivity ratio (PPR) expresses total payroll expense as a percentage of gross margin. Total payroll includes not only salaries and wages, but also all payroll taxes, insurance coverages and other fringe benefits. The ratio measures the portion of each gross margin dollar which must be committed to payroll. This is one of the few productivity ratios where a lower figure is desirable.
Total FTE Employees (Full-Time Equivalents) G&A Employee Productivity Revenue $ per Employee Gross Profit $ per Employee Salary $ per Employee Personnel Productivity Ratio (%) Payroll Expense (% of revenue) Direct Payroll Expense G&A Payroll Expense Total Firm Payroll Expense Owners’ Direct Labor Cost (% of revenue)
© 2015 Profit Planning Group, Inc.
Typical HTP
High Profit HTP
Revenue $500,000 $2 Mil.
Avg. Proj. $7,500 $20,000
Your Firm
6.0
12.0
5.5
6.0
5.0
183,333 65,859 54,825 43.6
203,238 82,757 55,715 35.2
196,400 65,859 51,783 46.9
194,859 71,436 54,825 42.8
240,000 96,000 55,000 35.4
16.2 16.8 33.0
15.5 13.9 29.4
15.2 18.1 33.3
15.0 16.6 31.6
14.2 14.2 28.3
0.0
0.0
0.0
0.0
3.1
13
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Operations Typical HTP
High Profit HTP
Revenue $500,000 $2 Mil.
Avg. Proj. $7,500 $20,000
Your Firm
Years in Business
13.0
13.0
12.5
13.0
5.0
Locations (excl. remote showrooms) Home Office Only (% of firms)
1 22.6
1 7.7
1 18.5
1 26.1
1 0.0
Planning & Practice (% of firms) Current Written Strategic/Business Plan Current Written Marketing/Communication Plan Use a Calendar Fiscal Year Use Software for Proposals & Proj. Mgmt. Use Design Software for Design Documents
41.5 22.6 86.8 90.6 83.0
46.2 38.5 84.6 100.0 92.3
37.0 18.5 92.6 92.6 81.5
43.5 17.4 87.0 100.0 91.3
100.0 100.0 100.0 100.0 100.0
Charge & Itemize Design Fees (% of firms) Contract Price Itemized as Design Fees (avg. %)
58.5 2.0
53.8 2.3
66.7 2.0
69.6 2.0
100.0 10.0
35.4 17.6 29.4 17.6 100.0
33.3 16.7 25.0 25.0 100.0
33.3 22.3 33.3 11.1 100.0
43.5 17.4 34.8 4.3 100.0
0.0 0.0 100.0 0.0 100.0
Collect Design Retainers (% of firms) Average Design Retainer (% of contract price)
82.4 4.0
N/A N/A
70.0 2.5
87.5 2.5
100.0 5.0
Profit Improvement Efforts (% of firms) Expanded Service And Technology Offerings Sold More Upgrades And Add-Ons Standardized Operational Processes Changed Product Lines Standardized Installation Processes Reduced Overhead Increased Marketing Efforts Negotiated Lower Rates With Suppliers Reduced Employee/Contract Positions Increased Prices Other Profit Improvement Efforts
83.0 75.5 71.7 54.7 60.4 47.2 54.7 45.3 18.9 54.7 7.5
76.9 76.9 76.9 46.2 61.5 53.8 53.8 53.8 15.4 61.5 7.7
81.5 66.7 77.8 51.9 59.3 44.4 51.9 29.6 29.6 51.9 7.4
87.0 73.9 73.9 56.5 56.5 39.1 47.8 39.1 21.7 56.5 17.4
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Design Fee Basis (% of firms) Estimated Hours Flat Fee Percent of Contract Other Basis Total Firms
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© 2015 Profit Planning Group, Inc.
Projects High Profit HTP
Typical HTP Completed Projects (comm. & res. excl. svc. & repair) Revenue $ per Project Commercial Projects (% of projects) Cost Job Labor & Materials (% of firms)
Revenue $500,000 $2 Mil.
Avg. Proj. $7,500 $20,000
Your Firm
93 10,054 6.4 60.0
104 19,035 2.9 92.3
91 10,532 7.7 57.7
93 10,685 8.5 56.5
59 18,305 0.0 100.0
Project Size (% of projects) Under $10,000 $10,000 to $20,000 $20,001 to $50,000 $50,001 to $100,000 $100,001 to $250,000 Over $250,000 Total Projects
74.6 14.0 8.7 2.1 0.6 0.0 100.0
74.8 13.2 7.5 1.7 2.8 0.0 100.0
72.8 15.2 8.6 2.4 1.0 0.0 100.0
73.7 14.0 9.1 2.6 0.6 0.0 100.0
67.8 16.9 8.5 3.4 3.4 0.0 100.0
Project Pricing (% of projects) Fixed Fee Time & Materials Other Pricing Total Projects
87.0 13.0 0.0 100.0
80.0 20.0 0.0 100.0
85.0 15.0 0.0 100.0
90.0 10.0 0.0 100.0
90.0 10.0 0.0 100.0
Service Pricing (% of service work) Fixed Fee Time & Materials Other Pricing Total Service Work
10.0 90.0 0.0 100.0
10.0 90.0 0.0 100.0
10.0 90.0 0.0 100.0
10.0 90.0 0.0 100.0
50.0 50.0 0.0 100.0
Residential Projects (% of resid. rev.) Single-Family Home – Existing – Retrofit Single-Family Home – Existing – Remodel Single-Family Home – New Custom Single-Family Home – New Production All Multi-Family/MDU Total Residential Revenue
35.0 22.4 40.0 2.6 0.0 100.0
24.0 27.2 42.5 6.3 0.0 100.0
29.0 22.6 45.0 3.4 0.0 100.0
31.8 20.0 48.2 0.0 0.0 100.0
10.0 70.0 10.0 10.0 0.0 100.0
Residential Projects Forecast (% of resid. rev.) Single-Family Home – Existing – Retrofit Single-Family Home – Existing – Remodel Single-Family Home – New Custom Single-Family Home – New Production All Multi-Family/MDU Total Residential Revenue
33.0 24.0 38.0 5.0 0.0 100.0
21.7 21.7 45.7 10.9 0.0 100.0
29.0 20.0 50.0 1.0 0.0 100.0
34.0 20.5 45.5 0.0 0.0 100.0
10.0 60.0 15.0 10.0 5.0 100.0
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Revenue Typical HTP
High Profit HTP
Revenue $500,000 $2 Mil.
Avg. Proj. $7,500 $20,000
Your Firm
Firms With Retail Operations (% of firms)
22.6
7.7
22.2
26.1
0.0
Revenue Trend 2013 to 2014 Revenue Change % 2014 to 2015 Revenue Change % Forecast
10.4 15.0
12.5 9.9
11.6 14.2
9.5 20.3
20.0 -16.7
Revenue Profile (% of revenue) Equipment Sales Labor Revenue Service Recurring Revenue Other Revenue Net Revenue
62.0 29.7 7.3 1.0 0.0 100.0
64.5 25.0 10.0 0.5 0.0 100.0
66.1 29.8 3.1 1.0 0.0 100.0
68.8 26.0 5.0 0.2 0.0 100.0
70.0 20.0 5.0 5.0 0.0 100.0
Labor Revenue Profile (% of labor revenue) Installation Project Management Design & Engineering Programming Other Labor Revenue Net Labor Revenue
73.7 5.0 5.0 16.3 0.0 100.0
72.0 3.0 5.0 20.0 0.0 100.0
74.2 5.8 4.6 15.4 0.0 100.0
77.0 3.8 3.0 16.2 0.0 100.0
60.0 15.0 15.0 10.0 0.0 100.0
Gross Margin (% of revenue) Equipment Gross Margin Labor Gross Margin (incl. service)
33.9 28.5
30.9 25.7
34.9 35.9
36.7 36.0
40.5 12.5
Recurring Revenue Services (% of firms) Firms Offering Recurring Revenue Services Never Plan To Offer Plan To Offer In Next 12 Months Plan To Offer In 13-24 Months Plan To Offer In More Than 24 Months
50.9 26.9 53.9 11.5 7.7
61.5 40.0 60.0 0.0 0.0
59.3 27.3 63.6 9.1 0.0
43.5 30.8 53.8 7.7 7.7
100.0 N/A N/A N/A N/A
Rec. Rev. Services Offered (% of firms with rec. rev.) Remote Security System Monitoring Service Contracts Remote Network Monitor & Diagnostic Services Other Recurring Revenue Services
74.1 59.3 63.0 0.0
50.0 50.0 87.5 0.0
66.7 60.0 73.3 0.0
70.0 60.0 50.0 0.0
100.0 100.0 100.0 0.0
32
26
14
32
15
91.7 4.6 3.7 0.0 100.0
34.6 16.3 49.1 0.0 100.0
86.5 6.0 7.5 0.0 100.0
92.9 7.1 0.0 0.0 100.0
33.3 33.3 33.3 0.0 100.0
Number of Rec. Rev. Agreements Sold Rec. Rev. Agreements Sold (% of agreements) Remote Security System Monitoring Service Contracts Remote Network Monitor & Diagnostic Services Other Recurring Revenue Services Total Recurring Revenue Agreements
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© 2015 Profit Planning Group, Inc.
Showrooms & Marketing High Profit HTP
Typical HTP Firms With Showrooms (% of firms) Showroom Space (% of firms with showrooms) Dedicated Showroom Conference/Board Room Retail Store Owner’s or Employee’s Home Model Home Client’s Home
Revenue $500,000 $2 Mil.
Avg. Proj. $7,500 $20,000
Your Firm
93.9
100.0
95.8
91.3
100.0
60.9 50.0 8.7 41.3 28.3 60.9
83.3 58.3 0.0 41.7 16.7 66.7
52.2 47.8 4.3 43.5 30.4 60.9
61.9 42.9 9.5 42.9 28.6 66.7
100.0 100.0 0.0 100.0 0.0 100.0
Top 3 Referral Sources (% of firms) Existing Clients Home Builders Architects Direct Home Owners Remodelers Interior Designers Realtors Lighting Designers Other Referral
89.6 62.5 35.4 29.2 31.3 35.4 12.5 2.1 2.1
83.3 75.0 33.3 50.0 0.0 41.7 16.7 0.0 0.0
95.8 62.5 33.3 16.7 33.3 37.5 16.7 4.2 0.0
100.0 76.2 28.6 33.3 33.3 23.8 0.0 4.8 0.0
100.0 0.0 100.0 0.0 0.0 100.0 0.0 0.0 0.0
Top 3 Marketing Targets (% of firms) Existing Clients Home Builders Architects Direct Home Owners Interior Designers Remodelers Realtors Lighting Designers Other Target
74.5 72.3 42.6 44.7 29.8 14.9 4.3 4.3 10.6
75.0 75.0 41.7 50.0 41.7 0.0 8.3 0.0 8.3
78.3 69.6 39.1 47.8 34.8 13.0 8.7 4.3 4.3
90.5 76.2 42.9 47.6 14.3 14.3 0.0 4.8 9.5
100.0 0.0 100.0 0.0 100.0 0.0 0.0 0.0 0.0
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Marketing Methods Marketing Practices Use Advertising/Marketing/PR Firm (% of firms) Track Marketing Efforts (% of firms) Referrals Yielding Business (% of referrals) Marketing Methods Used (% of firms) Direct Mail In-Store Events Demonstration Space/Showroom Local Magazine Advertisement Local Newspaper Advertisement Newspaper Free Standing Inserts (FSIS) Radio Advertisement Sports Sponsorship Local & National Television Printed Business Directory (Yellow Pages, etc.) Electronic Directory (Service Magic, Yellow Pages, etc.) Referral Fee/Incentive (existing client/bus. relations) Social Media (Twitter, Facebook, Linkedin, etc.) Search Engine Placements (Google Adwords, etc.) Search Engine Optimizations (Organic, etc.) Email Marketing Web Banner Ads Corporate Blogging Networking/Education (with residential professionals) Other Marketing Methods Marketing Method Success (1=poor to 3=good) Direct Mail In-Store Events Demonstration Space/Showroom Local Magazine Advertisement Local Newspaper Advertisement Newspaper Free Standing Inserts (FSIS) Radio Advertisement Sports Sponsorship Local & National Television Printed Business Directory (Yellow Pages, etc.) Electronic Directory (Service Magic, Yellow Pages, etc.) Referral Fee/Incentive (existing client/bus. relations) Social Media (Twitter, Facebook, Linkedin, etc.) Search Engine Placements (Google Adwords, etc.) Search Engine Optimizations (Organic, etc.) Email Marketing Web Banner Ads Corporate Blogging Networking/Education (with residential professionals) Other Marketing Methods
99999
Typical HTP
High Profit HTP
Revenue $500,000 $2 Mil.
Avg. Proj. $7,500 $20,000
42.3 46.2 66.5
38.5 38.5 80.0
33.3 44.4 80.0
34.8 52.2 60.0
100.0 100.0 5.0
30.2 30.8 55.8 34.6 9.6 5.8 11.5 21.2 1.9 23.1 34.6 57.7 59.6 53.8 50.0 42.3 7.7 15.4 67.3 5.8
46.2 23.1 61.5 46.2 0.0 0.0 0.0 38.5 0.0 15.4 7.7 38.5 69.2 53.8 46.2 61.5 0.0 15.4 69.2 15.4
29.6 26.9 46.2 30.8 7.7 7.7 11.5 23.1 3.8 30.8 42.3 57.7 61.5 46.2 50.0 38.5 3.8 11.5 61.5 3.8
26.1 30.4 60.9 34.8 4.3 4.3 8.7 13.0 0.0 34.8 39.1 60.9 56.5 52.2 52.2 43.5 13.0 17.4 69.6 8.7
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
1.5 1.5 2.0 1.0 1.0 N/A 2.0 1.0 N/A 1.0 1.0 2.0 2.0 2.0 2.0 2.0 2.0 1.5 2.0 N/A
1.5 N/A 3.0 2.0 N/A N/A N/A 1.0 N/A N/A N/A 2.0 2.0 2.0 2.0 2.0 N/A N/A 2.0 N/A
1.0 1.0 2.0 1.0 N/A N/A N/A 1.0 N/A 1.0 1.0 1.0 2.0 2.0 2.0 2.0 N/A N/A 2.0 N/A
2.0 2.0 2.0 1.0 N/A N/A N/A N/A N/A 1.0 1.0 1.0 2.0 2.0 2.0 2.0 N/A 1.5 2.0 N/A
2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
18
Your Firm
© 2015 Profit Planning Group, Inc.
Trends
Three Year Comparison Your Firm 2012
Your Firm 2013
Dollars Return On Investment Profit Margin (pre-tax) Asset Turnover Return On Assets (pre-tax) Financial Leverage Return On Net Worth (pre-tax) ODP Return on Assets (pre-tax) ODP Return on Net Worth (pre-tax)
%
Dollars
N/A N/A N/A N/A N/A N/A N/A
Your Firm 2014 %
Dollars
N/A N/A N/A N/A N/A N/A N/A
% 10.4 2.4 25.0 1.7 43.2 41.0 70.7
Income Statement Net Sales Cost Of Goods Sold Gross Margin Total Gross Margin Operating Expenses Payroll Expenses Occupancy Expenses Other Operating Expenses Total Operating Expenses Operating Profit Other Income/Expenses Profit Before Taxes All Owners' Compensation & Benefits Owners' Discretionary Profit
N/A N/A N/A N/A
100.0 N/A N/A N/A
N/A N/A N/A N/A
100.0 N/A N/A N/A
1,200,000 720,000 480,000 480,000
100.0 60.0 40.0 40.0
N/A N/A N/A N/A N/A N/A N/A 0 N/A
N/A N/A N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A 0 N/A
N/A N/A N/A N/A N/A N/A N/A N/A N/A
170,000 46,000 133,858 349,858 130,142 -5,000 125,142 80,000 205,142
14.2 3.8 11.2 29.2 10.8 -0.4 10.4 6.7 17.1
Assets Cash & Marketable Securities Accounts Receivable Inventory Other Current Assets Total Current Assets Fixed & Noncurrent Assets Total Assets
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A 100.0
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A 100.0
20,000 150,000 115,000 5,000 290,000 210,000 500,000
4.0 30.0 23.0 1.0 58.0 42.0 100.0
Liabilities & Net Worth Accounts Payable Notes Payable Other Current Liabilities Total Current Liabilities Long Term Liabilities Net Worth or Owner Equity Total Liabilities & Net Worth
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A 100.0
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A 100.0
30,000 100,000 60,000 200,000 10,000 290,000 500,000
6.0 20.0 12.0 40.0 2.0 58.0 100.0
Key Ratios Revenue Change Current Ratio Quick Ratio Accounts Payable To Inventory Accounts Payable Payout Period (days) Debt To Equity EBIT To Total Assets Times Interest Earned Average Collection Period (Days) Inventory Turnover (Times) Inventory Holding Period (Days) Sales To Inventory Ratio (Times) GMROI Sales Per Employee Gross Profit Per Employee Personnel Productivity Ratio © 2015 Profit Planning Group, Inc.
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
N/A 19
20.0 1.5 0.9 26.1 21.9 0.7 26.0 26.0 45.6 4.3 83.9 7.2 290 240,000 96,000
N/A
35.4 99999
Trends
Graphical Analysis
Typical HTP Your Firm
Owners' Discretionary Profit (%) 17.1 15.1 12.9 11.6
0.0
0.0
2012
2013
2014
Typical HTP Your Firm
Operating Expense Trend (%) 33.2 30.7
0.0
0.0
2012
2013
31.5 29.2
2014
Typical HTP Your Firm
Gross Margin Trend (%)
36.7
99999
36.7
0.0
0.0
2012
2013
20
40.0 38.5
2014
© 2015 Profit Planning Group, Inc.
Trends
Graphical Analysis
Typical HTP Your Firm
Revenue Change Trend (%)
21.6 20.0
10.4
10.2
0.0
0.0
2012
2013
2014
Typical HTP Your Firm
Revenue Per Employee Trend ($)
240,000
183,333 166,775 145,950
0
0
2012
2013
2014
Typical HTP Your Firm
Accounts Receivable Collection Trend (days) 45.6
19.0
17.3 14.7
0.0
0.0
2012
2013
© 2015 Profit Planning Group, Inc.
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2014
99999
An Action Program Management always faces a long list of things to do. With regard to profitability, the challenge is to focus on doing those things which have the greatest impact on profit. Based on the results of the benchmark survey, CEDIA members should particularly focus on the following three profit drivers which are key to their business. Firms must set specific goals in each of these key areas. Revenue Growth Without some revenue growth it is almost impossible to generate adequate profit. However, business analysts frequently overstate the level of growth required. They suggest if 10% growth is good then 20% is even better. The reality is quite different. Firms can engineer strong profit improvements as long as revenue growth exceeds price increases in the economy by somewhere around 3%. That is, if inflation is 2%, then revenue growth must be at least 5% (the reasons behind this seemingly small increase will be discussed further in the payroll expense section). This goal for revenue growth, however, needs to be met when the economy is both good and bad. In a booming economy, this growth is nearly automatic. In more difficult times, firms must work hard to meet the goal by effectively turning prospects into transactions and maximizing the revenue from every transaction. Gross Margin Percentage The single most important factor driving higher profit for CEDIA members is increasing the gross margin percentage. For a given level of revenue, a higher gross margin percentage means more gross margin dollars most of which go directly to the bottom line. The real key to gross margin management for CEDIA members is control of pricing. In any big-ticket environment there is always a tremendous amount of pressure on pricing. A 2.0% price reduction on a $20,000 project is a $400 reduction in profit. Since the typical CEDIA member only makes a $500 profit on a $20,000 transaction, seemingly small price reductions can be devastating to profit. Every firm has a unique gross margin structure but a realistic goal for all firms is to increase the gross margin percentage around 0.3% annually. Payroll Expense Payroll and fringe benefits represent the largest expense category by far. There is also a strong upward pressure on payroll from health insurance and every employee's desire for better compensation. The key to controlling payroll expense is limiting any increase to 2% less than the increase in revenue. The revenue growth example above suggested if inflation is 2% then revenue must increase by 5%. In this model, payroll must be held to no more than a 2% increase. This difference is what is commonly called a “real revenue gain”. Producing such a gain is absolutely vital to improving profits. Firms which successfully combine revenue growth, gross margin improvement and payroll control can increase profits sharply in a fairly short time. Every firm's action plan must focus on these key profit drivers.
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© 2015 Profit Planning Group, Inc.
Profit Toolkit Profit Toolkit OnlineTM is a spreadsheet for use in conjunction with this report. The toolkit allows you to quickly develop a basic financial plan using the information presented in this report. Your firm can expand this basic plan into a detailed financial plan for improving profitability. Use your web browser to download Profit Toolkit OnlineTM from this case sensitive address. http://www.profitplanninggroup.com/toolkit/profittoolkit2015.xls Save the file to your hard disk before you start work. To save the file from Excel, select “File” and “Save As” from the menu. If prompted for a password to save the file, click cancel. The password to open the file 15ptkit. To start planning, open the spreadsheet and enter your firm’s “Current Results”. The following figures are based on the data submitted for your firm. You can revise them to reflect your current position and replace any N/A values with actual figures. Try as many plans as you like. Current Results
Your Firm
Net Revenue
1,200,000
Cost Of Goods Sold
720,000
Payroll
137,500
Fringe Benefits
32,500
Operating Profit
130,142
Profit Before Taxes
125,142
Total Assets
500,000 20,000
Cash Accounts Receivable
150,000
Inventory
115,000 100.0
Credit Sales (% Of Revenue) Stocked Sales (% Of Revenue)
© 2015 Profit Planning Group, Inc.
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69.4
99999