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NRHA Cost Of Doing Business Study - Hardware Store Analysis

Other sections available on the PNWA web site include: Introduction Executive Summary Income Statement

Typical Hardware High Profit Hardware Single Store Hardware  Multi- Store Hardware Number Of Firms Reporting Typical Sales Volume Sales Growth (1996 vs. 1995)  563 $978,827 4.1% 148 $1,096,899 5.4% 512 $904,884 4.2%   49 $2,313,992 3.6% Strategic Profit Model Ratios         Profit Margin (Pre-tax) 2.3% 5.9% 2.4% 1.6% Asset Turnover 2.0 2.3 2.0 2.1 Return On Assets (Pre-tax) 4.6%  13.6%  4.8%  3.4%  Financial Leverage 1.5 1.3 1.5 1.7 Return On Net Worth (Pre-tax) 6.9% 17.7% 7.2% 5.8% Income Statement Net Sales 100% 100% 100%  100% Cost Of Goods Sold 63.7 62.2 63.7  64.1 Gross Margin before Rebates or Dividends 36.3 37.8 36.3  35.9 Purchase Rebates or Patronage Dividends 1.2 1.6 1.2  1.3 Gross Margin after Rebates or Dividends 37.5 39.4 37.5  37.2 Payroll Expenses Owners/Officers Salaries & Bonuses 4.8 4.9 5.1  3.5 All Other Employee Salaries, Wages & Bonuses 12.9 12.8 12.6  14.4 Total Salaries, Wages & Bonuses 17.7 17.7 17.7  17.9 Payroll Taxes, FICA, Workers' Comp & Unempl. 1.6 1.5 1.6  1.6 Group Insurance (Hospital/Medical/Life) 0.9 0.9 0.9  0.8 Benefit Plans (Pension, Profit Sharing, etc.) 0.0 0.1 0.0  0.1 Total Payroll Expenses 20.2 20.2 20.2  20.4 Occupancy Expenses Utilities: Heat, Light, Power, Water 1.1 0.9 1.1  1.3 Building Repairs & Maintenance 0.3 0.3 0.3  0.4 Rent or Ownership in Real Estate 3.6 3.7 3.6  4.5 Total Occupancy Expenses 5.0 4.9 5.0  6.2 Other Operating Expenses Advertising and Promotion 2.4 2.1 2.4  2.4 Telephone 0.4 0.3 0.4  0.4 Insurance (Business Liability & Casualty) 0.8 0.6 0.8  0.5 Interest Expense 1.3 0.8 1.2  1.5 Taxes 0.2 0.2 0.2  0.1 Depreciation 1.1 1.1 1.1  1.2 Bad Debt Losses 0.1 0.0 0.1  0.1 All Other Operating Expenses 4.3 3.8 4.3  3.7 Total Other Operating Expenses 10.6 8.9 10.5  9.9 Total Operating Expenses 35.8 34.0 35.7  36.5 Operating Profit 1.7 5.4 1.8  0.7 Other Income/Expense 0.6 0.5 0.6  0.9 Profit Before Taxes 2.3% 5.9% 2.4%  1.6% Balance Sheet Typical Hardware High Profit Hardware Single Store Hardware  Multi- Store Hardware Assets          Cash & Marketable Securities  4.6%  6.4%  4.9%  2.9% Accounts Receivable (Trade)  8.1  8.5  8.0  9.4 Inventory  59.3  57.7  59.4  58.7 Other Current Assets  0.7  0.5  0.7  1.2 Total Current Assets  72.7  73.1  73.0  72.2 Investments (Stocks, Bond, etc.)  13.5  14.4  13.6  12.7 Total Fixed & Noncurrent Assets  13.8  12.5  13.4  15.1 Total Assets  100.0%  100.0%  100.0%  100.0% Liabilities and Net Worth         Accounts Payable (Trade)  11.8%  10.6%  11.8%  11.9% Notes Payable  0.7  0.0  2.2  3.7 Other Current Liabilities  3.0  3.3  3.6  3.7 Total Current Liabilities  15.5  13.9  17.6  19.3 Long Term Liabilities  17.8  9.2  15.8  21.9 Net Worth or Owner Equity  66.7  76.9  66.7  58.8 Total Liabilities & Net Worth  100.0%  100.0%  100.0%  100.0% Financial Ratios Typical Hardware High Profit Hardware Single Store Hardware  Multi- Store Hardware Current Ratio  4.7 5.3 4.1   3.7 Quick Ratio  0.8  1.1  0.7  0.6 Accounts Payable To Inventory  19.9%  18.4%  19.9%  20.3% Accounts Payable Payout (Days)  28.3  24.0  28.2  29.7 Debt to Equity  0.5  0.3  0.5  0.7 EBIT To Total Assets  7.2%  15.4%  7.2%  6.5% Times Interest Earned  2.8  8.4  3.0  2.1 Asset Productivity Ratios Typical Hardware High Profit Hardware Single Store Hardware  Multi- Store Hardware Cash Sales (% Of Total Sales)  70% 70% 70%   70% Average Collection Period (Days) 43.5  42.0  43.5  46.8 Inventory Turnover  2.4  2.8  2.4  2.3 Inventory Holding Period (Days)  152.1  130.4  152.1  158.7 Sales To Inventory Ratio  3.9  4.6  3.8  4.0 Gross Margin Return On Inventory  146.2%  181.2%  142.5%  148.8% Growth and Cash Sufficiency Ratios Typical Hardware High Profit Hardware Single Store Hardware  Multi- Store Hardware Growth Potential Index  8.1% 21.8% 8.5%   5.0% Cash Cycle (Days)  167.3  148.4  167.4  175.8 Cash To Current Liabilities  29.7%  46.0%  27.8%  15.0% Defensive Interval (Days)  18.2  31.6  18.7  11.9 Sales To Working Capital  4.1  4.4  4.1  4.1 Operating Productivity Ratios Typical Hardware High Profit Hardware Single Store Hardware  Multi- Store Hardware Sales Per Store  $910,480 $1,059,740 $904,884   $921,019 Selling Area-Square Feet  7,382  7,000  7,000  15,300 Sales Per Square Foot-Selling Area  $136  $156  $136  $134 Gross Margin Per Sq. Ft.-Selling Area  $52  $62  $50  $54 Inventory Per Sq. Ft.-Selling Area  $33 $32  $33  $37 Total Area- Square Feet  11,880  10,000  10,650  22,000 Sales Per Square Foot-Total Area  $90  $101  $87  $101 Rent Per Square Foot-Total Area  $3.10  $3.50  $3.00  $4.00 Sales by Type of Customer Typical Hardware High Profit Hardware Single Store Hardware  Multi- Store Hardware Consumer  68.6% 68.5% 68.3%   71.0% Contractor/Remodelers  12.5  11.2  12.7  11.1 Industrial/Commercial Accounts  18.9  20.3  19.0  17.9 Total Sales  100.0%  100.0%  100.0%  100.0% Annual Customer Count  72,575  80,000  67,797  176,000 Sales Per Customer  $12  $13  $12  $12 Employee Productivity Ratios Typical Hardware High Profit Hardware Single Store Hardware  Multi- Store Hardware Number Of F.T.E. Employees  10 10 9   24 Sales Per Employee  $104,761  $107,682  $104,828  $104,205 Gross Margin Per Employee  $39,204  $43,734  $39,281  $38,838 Payroll Per Employee (including benefits)  $20,574  $20,373  $20,574  $20,742 Salary Per Employee  $17,810  $17,308  $17,791  $18,395 Payroll Expense --% Of Sales  20.2%  20.2%  20.2%  20.4% Personnel Productivity Ratio  53.9%  51.3%  53.9%  54.8% Top of Page

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