As would be expected, performance varies by industry segment. Hardware
store retailers which are by far the largest component of the survey, had
the lowest sales volume and the lowest sales per employee. Return on assets
was also lowest at 4.6 percent. However, gross margins were the highest
of any segment.
The lumber/building materials outlets reflected a mirror image of hardware
store retailers. They had the highest sales productivity, but the lowest
gross margin. This group had a return on assets of 5.7 percent.
Home centers were the smallest segement of the survey. Their sales productivity
and margin figures were in between the other two groups. This tendency
was also reflected in the return on assets which was 5.3 percent.
The Critical Profit Variables
| |
Typical
Hardware |
Typical
Home
Center |
Typical
Lumber
Outlet |
Sales Per Employee
Measures employee productivity |
$104,761 |
$150,154 |
$195,990 |
Gross Margin
Reflects the ability to buy and sell optimally |
37.5% |
30.7% |
24.6% |
Operating Expense
Focuses on expense control |
35.8% |
29.2% |
23.2% |
Inventory Turnover
Reflects how well inventory is managed |
2.4 |
3.7 |
4.3 |
Average Collection Period
Reflecs accounts receivable collection practices |
43.5 Days |
50.8 Days |
43.0 Days |
An Overview of Financial Results
| |
Typical
Hardware |
Typical
Home
Center |
Typical
Lumber
Outlet |
| Net Sales |
$978,827 |
$3,173,990 |
$2,588754 |
| Cost Of Goods Sold |
$611,767 |
$2,199,575 |
$1,951,920 |
| Gross Margin |
367,060 |
974,415 |
636,833 |
| Operating Expenses |
350,420 |
926,805 |
600,591 |
| Operating Profit |
16,640 |
47,610 |
36,243 |
| Other Income/Expense |
5,873 |
22,218 |
20,710 |
| Profit Before Taxes |
$22,513 |
$69,828 |
$56,953 |
| Total Assets |
$489,414 |
$1,322,495 |
$995,675 |
| Return On Assets |
4.6% |
5.3% |
5.7% |
|
