Sample Furniture

Profit Maximization Analysis
                   12/31/2008




 PROFITconsulting. 422 E. Vermijo, Suite ...
Table of Contents
                                                                 Page

  A. Financial Analysis – Forward...
Profit Maximization Analysis                                                                                              ...
Profit Maximization Analysis                                                                                              ...
Profit Maximization Analysis                                                                                              ...
Profit Maximization Analysis                                                                                              ...
Profit Maximization Analysis                                                                                              ...
Profit Maximization Analysis                                                                                              ...
Profit Maximization Analysis                                                                                              ...
Profit Maximization Analysis                                                                                              ...
Profit Maximization Analysis                                                                                              ...
Profit Maximization Analysis                                                                                              ...
Comparative Business Analysis for Retail Furniture Operations
Comparative Business Analysis for Retail Furniture Operations
Comparative Business Analysis for Retail Furniture Operations
Comparative Business Analysis for Retail Furniture Operations
Comparative Business Analysis for Retail Furniture Operations
Comparative Business Analysis for Retail Furniture Operations
Comparative Business Analysis for Retail Furniture Operations
Comparative Business Analysis for Retail Furniture Operations
Comparative Business Analysis for Retail Furniture Operations
Comparative Business Analysis for Retail Furniture Operations
Comparative Business Analysis for Retail Furniture Operations
Upcoming SlideShare
Loading in …5
×

Comparative Business Analysis for Retail Furniture Operations

2,455 views

Published on

Here is an example of an Analysis and Metrics Comparison that we do for Businesses.

0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
2,455
On SlideShare
0
From Embeds
0
Number of Embeds
4
Actions
Shares
0
Downloads
74
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

Comparative Business Analysis for Retail Furniture Operations

  1. 1. Sample Furniture Profit Maximization Analysis 12/31/2008 PROFITconsulting. 422 E. Vermijo, Suite 100. Colorado Springs, CO 80903 Tel: 800-888-5564 or 719-332-9824; Fax:866-221-5337; e-mail:info@profitconsulting.net
  2. 2. Table of Contents Page A. Financial Analysis – Forward…..………………………………….………3 Financial Statement, P&L – High Profit Comparison……………...…..….4 Financial Statement, P&L Detail…………………………………………..5 Financial Statement, Balance Sheet – High Profit Comparison ………..…6 GMROI…………………………………………………………………….7 Gross Margin ………………………………………………………………8 Inventory Turnover ………..……………………………………………….9 Sales Per Square Foot………………………………………………………10 Sales Per Employee………………………………………………………...11 Net Income………………………………………………………………….12 Break Even Analysis………………………………………………………..13 Financial Ratios and Sales Metrics………………………………………… 14 B. Inventory – Forward…..…………………………………………………….15 Inventory Blend………………………………………………………….….16 Inventory Aging……………………………………………………………..17 Best Seller In-stock Days……………………………………………………18 Category GMROI……………………………………………………………19 Vendor GMROI……………………………………………………………...20 C. Observations/Recommendations ………………………………………...…21 D. Bibliography…………………………………………………………………22 E. Appendix – Financial Ratio Definitions……………………………………..23
  3. 3. Profit Maximization Analysis CONFIDENTIAL Sample Furniture Financial Analysis - Forward PROFITconsulting, the management consulting department of PROFITsystems, Inc., has developed Profit Maximization Analysis to assist furniture retailers in interpreting their systems’ data. A management consultant analyzes important systems reports, explains the findings, provides recommendations and presents the Profit Management Analysis. Profit Management Analysis graphically portrays key company figures and uses some NHFA data as a comparison point. Some modifications have been made to conform to the typical PROFITprofessional financial presentation. Your results are then tracked on trend lines over time so that we can effectively develop a targeted profitability strategy. We cannot improve what we don’t track! Profit Maximization Analysis is divided into two main sections – Financial Analysis and Inventory Analysis. In the following section, our Financial Analysis displays a macro view of your company. We start with an annualized P&L comparison to High Profit Dealers and Typical Dealers. After the P & L, is a balance sheet comparison with financial ratios. Then we graphically compare your source data with NHFA data and chart your progress on a trend line over time. For your investment productivity, we analyze your GMROI and it’s components, Gross Margin and Inventory turnover. Then we look at efficiency ratios – Sales and Gross Margin per Employee and per Square Foot. Finally we track your annualized Net Income and conduct a Contribution Margin and Break-Even Analysis. Our Inventory Analysis section is more of a micro analysis in that we analyze productivity within your investment. The critical components of Inventory Blend, Inventory Aging, Category and Vendor GMROI are tracked. Profit Maximization Analysis is not just a report for your review. It is a system that goes hand-in-hand with the services of our management consultants. It is a tool that we use to help you chart a path towards double digit profits! Page 3 Prepared by PROFITconsulting Copyright PROFITsystems, Inc.
  4. 4. Profit Maximization Analysis CONFIDENTIAL Financial Statement - P & L - (Annualized) Sample Furniture Comparison with a High Profit Dealer Initial % of Current % of % High % of Difference Average % of Difference 9/30/2008 Sales 12/31/2008 Sales Change Profit Sales HP & Current Sales Average-Current Sales $4,000,000 100% $4,200,000 100% 5.00% $4,200,000 100.00% $4,200,000 100.00% Cost of Goods Sold 2,200,000 55.00% 2,352,000 56.00% 1. % 2,289,000 54.50% 1.5 % 2,356,200 56.10% - .1 % Gross Margin $1,800,000 45.00% $1,848,000 44.00% - 1. % $1,911,000 45.50% - 1.5 % $1,843,800 43.90% .1 % Cash Discounts & Rebates 13,333 0.33% 14,000 0.33% 0.00% 16,800 0.40% - .07 % 16,800 0.40% - .07 % Gross Realized Margin $1,813,333 45.33% $1,862,000 44.33% - 1. % $1,927,800 45.90% - 1.57 % $1,860,600 44.30% .03 % Operating Expenses Administrative Expense $360,000 9.00% $400,000 9.52% .52 % $508,200 12.10% - 2.58 % $562,800 13.40% - 3.88 % Occupany Expense 240,000 6.00% 245,000 5.83% - .17 % 319,200 7.60% - 1.77 % $310,800 7.40% - 1.57 % Advertising Expense 220,000 5.50% 210,000 5.00% - .5 % 235,200 5.60% - .6 % $247,800 5.90% - .9 % Selling Expense 360,000 9.00% 365,000 8.69% - .31 % 348,600 8.30% .39 % $344,400 8.20% .49 % Customer Service Expense 40,000 1.00% 41,000 0.98% - .02 % 33,600 0.80% .18 % $37,800 0.90% .08 % Delivery Expense 60,000 1.50% 63,000 1.50% .% 12,600 0.30% 1.2 % $54,600 1.30% .2 % Warehouse Expense 120,000 3.00% 120,000 2.86% - .14 % 134,400 3.20% - .34 % $126,000 3.00% - .14 % Total Operating Expenses $1,400,000 35.00% $1,444,000 34.38% - .62 % $1,591,800 37.90% - 3.52 % $1,684,200 40.10% - 5.72 % Net Operating Income $413,333 10.33% $418,000 9.95% - .38 % $336,000 8.00% 1.95 % $176,400 4.20% 5.75 % Other Income & Expense Other Income $8,000 0.20% $7,000 0.17% - .03 % $4,200 0.10% .07 % $4,200 0.10% .07 % Other Expenses -80,000 -2.00% -80,000 -1.90% .1 % -75,600 -1.80% - .1 % -$88,200 -2.10% .2 % Interest Expense -16,000 -0.40% -16,000 -0.38% .02 % -16,800 -0.40% .02 % -$16,800 -0.40% .02 % Total Other Income & Expense -$88,000 -2.20% -$89,000 -2.12% .08 % -$88,200 -2.10% - .02 % -$100,800 -2.40% .28 % Net Income Before Income Taxes $325,333 8.13% $329,000 7.83% - .3 % $247,800 5.90% 1.93 % $75,600 1.80% 6.03 % - $ 3667 Minimum Opportunity -$81,200 Opportunity at 10.0% $91,000 $ Value of Change 10.0 % is High Range Profitability Between initial and current values Difference between current value and High Profit Dealer Earnings before Interest, Taxes, Depreciation & Amortization Net Income Before Income Taxes $325,333 8.13% $329,000 7.83% - .3 % $247,800 5.90% 1.93 % $75,600 1.80% 6.03 % Interest Expense 16,000 0.40% 16,000 0.38% - .02 % 16,800 0.40% - .02 % $16,800 0.40% - .02 % Depreciation & Amortization 26,667 0.67% 26,666 0.63% - .03 % 33,600 0.80% - .17 % $33,600 0.80% - .17 % EBITDA $368,000 9.20% $371,666 8.85% - .35 % $298,200 7.10% 1.75 % $126,000 3.00% 5.85 % Page 4 Prepared by PROFITconsulting Copyright PROFITsystems, Inc.
  5. 5. Profit Maximization Analysis CONFIDENTIAL Financial Statement - P & L Detail - (Annualized) Sample Furniture Comparison with High Profit Dealer Initial % of Current % of % High % of Difference Average % of Difference 9/30/2008 Sales 12/31/2008 Sales Change Profit Sales HP & Current Sales Average-Current Payroll Expense Administrative Wages & Bonuses $120,000 3.00% $122,000 2.90% - .1 % $260,400 6.20% - 3.3 % $273,000 6.50% - 3.6 % Occupancy Wages & Bonuses 0 0.00% 0 0.00% .% 0 0.00% .% 0 0.00% .% Advertising Wages & Bonuses 0 0.00% 0 0.00% .% 0 0.00% .% 0 0.00% .% Sales Salaries, Comm & Bonus 326,667 8.17% 315,000 7.50% - .67 % 344,400 8.20% - .7 % 344,400 8.20% - .7 % Customer Service Wages & Bonuses 32,000 0.80% 32,000 0.76% - .04 % 54,600 1.30% - .54 % 46,200 1.10% - .34 % Delivery Wages & Bonuses 53,333 1.33% 54,000 1.29% - .05 % 96,600 2.30% - 1.01 % 105,000 2.50% - 1.21 % Warehouse Wages & Bonuses 56,000 1.40% 56,000 1.33% - .07 % 96,600 2.30% - .97 % 109,200 2.60% - 1.27 % Other Wages & Bonuses 0 0.00% 0 0.00% .% 4,200 0.10% - .1 % 21,000 0.50% - .5 % Owner's Salaries & Bonuses 100,000 2.50% 100,000 2.38% - .12 % 0 0.00% 2.38 % 0 0.00% 2.38 % Total Gross Wage Expense $688,000 17.20% $679,000 16.17% - 1.03 % $856,800 20.40% - 4.23 % $898,800 21.40% - 5.23 % ` Payroll Taxes (Fica, Medicare, Unemployment) $69,333 1.73% $68,000 1.62% - .11 % $58,800 1.40% .22 % $67,200 1.60% .02 % Workers' Compensation 24,000 0.60% 24,000 0.57% - .03 % 0 0.00% .57 % 0 .57 % Group Insurance (Hospital, Medical, Etc.) 33,333 0.83% 34,000 0.81% - .02 % 37,800 0.90% - .09 % 46,200 1.10% - .29 % Benefit Plans (401K, Pensions, Profit Sharing) 16,000 0.40% 16,000 0.38% - .02 % 12,600 0.30% .08 % 8,400 0.20% .18 % Total Payroll Burden $142,667 3.57% $142,000 3.38% - .19 % $109,200 2.60% .78 % $121,800 2.90% .48 % Total Payroll Expense $830,667 20.77% $821,000 19.55% - 1.22 % $966,000 23.00% - 3.45 % $1,020,600 24.30% - 4.75 % Payroll Burden as % of Total Gross Wage Exp. 20.74% 20.91% 12.75% 13.55% Advertising Expenditure by Type Direct Mail 20.0% 20.0% 18.1% 14.9% Internet/Web 18.2% 19.0% 0.5% 0.4% Magazines & Circulars 12.1% 12.4% 10.3% 9.1% Newspaper 18.2% 18.9% 30.3% 28.2% Radio 4.8% 5.7% 4.9% 6.8% Television 21.8% 20.0% 35.6% 35.6% Yellow Pages 1.2% 1.1% 1.1% 0.8% Other 10.9% 11.4% 12.1% 13.8% Co-op Advertising -7.3% -8.6% -12.9% -9.6% Total Advertisng Expense 100.0% 100.0% 100.0% 100.0% ` Page 5 Prepared by PROFITconsulting Copyright PROFITsystems, Inc.
  6. 6. Profit Maximization Analysis CONFIDENTIAL Sample Furniture 12/31/2008 Financial Statement - Balance Sheet Comparison with High Profit Dealer Initial % of Current % of % High % Difference Typical % Difference 9/30/2008 Assets/Liab. 12/31/2008 Assets/Liab. Change Profit Assets/Liab. HP & Current Assets/Liab. Average Assets $ 50,000 5.10% $ 70,000 7.30% 176,456 18.40% 82,474 8.60% Cash & Marketable Securities 2.20% -11.10% -1.30% $ 35,000 3.57% $ 25,000 2.61% 54,663 5.70% 40,278 4.20% Accounts Receivable -0.96% -3.09% -1.59% $ 750,000 76.53% $ 725,000 75.60% 582,113 60.70% 641,571 66.90% Inventory -0.93% 14.90% 8.70% $ 5,000 0.51% $ 4,000 0.42% 20,139 2.10% 16,303 1.70% Other Current Assets -0.09% -1.68% -1.28% $ 840,000 85.71% $ 824,000 85.92% 833,371 86.90% 780,626 81.40% Total Current Assets 0.21% -0.98% 4.52% $ 125,000 12.76% $ 120,000 12.51% 111,244 11.60% 148,645 15.50% Fixed Assets, net -0.24% 0.91% -2.99% $ 15,000 1.53% $ 15,000 1.56% 14,385 1.50% 29,729 3.10% Other Assets 0.03% 0.06% -1.54% $ 980,000 100% $ 959,000 100% 959,000 100% 959,000 100% Total Assets 0.00% 0.00% 0.00% Liabilities and Net Worth $ 200,000 20.41% $ 175,000 18.25% -2.16% 116,039 12.10% 112,203 11.70% Accounts Payable 6.15% 6.55% $ 100,000 10.20% $ 85,000 8.86% -1.34% 94,941 9.90% 94,941 9.90% Customer Deposits -1.04% -1.04% $ 130,000 13.27% $ 125,000 13.03% -0.23% 59,458 6.20% 73,843 7.70% Notes Payable - Current 6.83% 5.33% $ 30,000 3.06% $ 40,000 4.17% 1.11% 115,080 12.00% 125,629 13.10% Other Current Liabilities -7.83% -8.93% $ 460,000 46.94% $ 425,000 44.32% -2.62% 385,518 40.20% 406,616 42.40% Total Current Liabilities 4.12% 1.92% $ 50,000 5.10% $ 50,000 5.21% 0.11% 221,529 23.10% 156,317 16.30% Long Term Liabilities -17.89% -11.09% $ 470,000 47.96% $ 484,000 50.47% 2.51% 351,953 36.70% 396,067 41.30% Net Worth or Owners Equity 13.77% 9.17% $ 980,000 100% $ 959,000 100% 959,000 100% 959,000 100% Total Liabilities & Net Worth 0.00% 0.00% 0.00% ` Page 6 Prepared by PROFITconsulting Copyright PROFITsystems, Inc.
  7. 7. Profit Maximization Analysis CONFIDENTIAL Sample Furniture GMROI Dealer Type GMROI 2.60 $2.55 Sample Furniture 2.55 2.55 NHFA High Profit 2.47 2.50 $2.47 NHFA Average 2.28 2.45 2.40 GMROI Progress Tracker 2.35 2.60 $2.28 2.30 2.50 2.40 2.25 2.30 2.20 2.20 2.15 2.10 2.00 2.10 Sample Furniture NHFA High Profit NHFA Average r r r e st er ril y ay fit ne ly be be be ar ag Ju gu Ap ro ob M Ju Dealer Type em em nu em er P Au ct Ja Av h pt O ov ec ig Se N D H Analysis Congratulations! Your GMROI is Greater than the High Profit Dealer. Opportunity Congratulations! You have $0.08 more GMROI than the High Profit Dealer. Definition GMROI is defined as the number of dollars of gross margin realized annually per dollar of investment. It is the primary indicator of the productivity of your inventory investment. It takes into account both gross margin realized and inventory turns. Prepared by PROFITconsulting Page 7 Copyright PROFITsystems, Inc.
  8. 8. Profit Maximization Analysis CONFIDENTIAL Sample Furniture Gross Margin Dealer Type Gross Margin 46.00% Sample Furniture 44.00% 45.50% 45.50% High Profit 45.50% Average 43.90% Gross Margin 45.00% Progress Tracker 44.50% 46.00% 44.00% 45.00% 43.90% 44.00% 44.00% 43.00% 43.50% 42.00% 41.00% 43.00% Sample Furniture High Profit Average 40.00% Dealer Type r it ne r y ly st r ge r il ay er be be be of ar Ju Ap gu ob Ju a M Pr nu em em em er Au ct Ja Av h ov ec pt O ig Se N D H Analysis Your Gross Margin is Greater than the Average Dealer, but Less than the High Profit Dealer. Opportunity You have 1.5% less Gross Margin than the High Profit Dealer. Definition Gross Margin is what you are left with after the sale of goods. It is calculated by subtracting the cost of goods from the sale amount. It is a measure of your efficiency of turning inventory purchases into income. Page 8 Prepared by PROFITconsulting Copyright PROFITsystems, Inc.
  9. 9. Profit Maximization Analysis CONFIDENTIAL Sample Furniture Inventory Turnover Dealer Type Turns 3.30 3.24 Sample Furniture 3.24 3.20 NHFA High Profit 3.00 Inventory Turnover 3.10 NHFA Average 2.80 3.00 3.00 Progress Tracker 3.50 2.90 2.80 3.00 2.80 2.50 2.00 2.70 1.50 2.60 1.00 0.50 2.50 Sample Furniture NHFA High Profit NHFA Average 0.00 st Dealer Type ril it r r r ne y ay ly e er be be be of ar ag gu Ap Ju ob Ju M Pr em m m nu er Au ct ve ce Ja gh Av pt O No De Se Hi Analysis Congratulations! Your Inventory Turns are Greater than the High Profit Dealer. Opportunity Congratulations! You have 0.24 more turns than the High Profit Dealer. Definition Inventory turnover is the number of times you sell your current value of inventory. It is the ratio of the cost of the goods you sell to your inventory value. Page 9 Prepared by PROFITconsulting Copyright PROFITsystems, Inc.
  10. 10. Profit Maximization Analysis CONFIDENTIAL Sample Furniture Sales Per Square Foot - Selling Space Dealer Type Sales/Sq. Ft. GM/Sq. Ft. 25000 25000 $180.00 $168.00 Sample Furniture $ 168.00 $ 73.92 $160.00 $147.00 $146.00 Dollars Per Square Foot NHFA High Profit $ 147.00 $ 60.00 $140.00 NHFA Average $ 146.00 $ 61.00 $120.00 $100.00 Progress Tracker - Sales/Squ.Ft. $73.92 $80.00 170.00 $61.00 $60.00 165.00 $60.00 160.00 $40.00 155.00 $20.00 150.00 $- 145.00 Sample Furniture NHFA High Profit NHFA Average 140.00 Dealer Type 135.00 st ril it r r r ne y ay ly e er be be be of ar ag gu Ap Ju ob Ju M Pr em m m nu er Au Sales/Sq. Ft. GM/Sq. Ft. ct ve ce Ja gh Av pt O No De Se Hi Analysis Congratulations! Your Sales per Square Foot are Greater than the High Profit Dealer. Congratulations! Gross Margin per Square Foot is Greater than the High Profit Dealer. Opportunity Congratulations! You have $21.00 more Sales/Square Foot than the High Profit Dealer. Congratulations! You have $13.92 more GM/Square Foot than the High Profit Dealer. Definition Sales and gross margin per square foot are indicators of the efficient use of sales floor space. The higher your sales per square foot the greater are your turns. Page 10 Prepared by PROFITconsulting Copyright PROFITsystems, Inc.
  11. 11. Profit Maximization Analysis CONFIDENTIAL Sample Furniture Sales and Gross Margin per Employee Dealer Type Sales/Emp. GM/Emp. 21 21 $250,000 Sample Furniture $ 200,000 $ 88,000 $200,000 $194,542 $194,401 Dollars Per Employee $200,000 High Profit $ 194,401 $ 87,814 Average $ 194,542 $ 86,598 $150,000 Progress Tracker - Sales/Emp. $205,000 $88,000 $87,814 $86,598 $100,000 $200,000 $195,000 $50,000 $190,000 $185,000 $- $180,000 Sample Furniture High Profit Average $175,000 Dealer Type $170,000 st ril it r r r ne y ay ly e er be be be of ar ag gu Ap Ju ob Ju M Pr em m m nu er Au Sales/Emp. GM/Emp. ct ve ce Ja gh Av pt O No De Se Hi Analysis Congratulations! Your Sales per Employee are Greater than the High Profit Dealer. Congratulations! Gross Margin per Employee is Greater than the High Profit Dealer. Opportunity Congratulations! You have $5,599 more Sales/Employee than the High Profit Dealer. Congratulations! You have $186.00 more GM/Employee than the High Profit Dealer. Definition Sales and Gross Margin per employee are measures of employee productivity. They allow us to gauge your current staffing levels and their overall output. High marks here mean solid overall human resource levels. Page 11 Prepared by PROFITconsulting Copyright PROFITsystems, Inc.
  12. 12. Profit Maximization Analysis CONFIDENTIAL Sample Furniture Net Income Dealer Type COGS Total Net Income 5.90% 1.80% Expenses 7.83% 100% Sample Furniture 56.00% 36.17% 7.83% 90% 80% NHFA High Profit 54.50% 39.60% 5.90% 42.10% Percent of Sales 39.60% 36.17% 70% NHFA Average 56.10% 42.10% 1.80% 60% 50% Progress Tracker 10.00% 40% 9.00% 30% 56.00% 56.10% 8.00% 54.50% 7.00% 20% 6.00% 10% 5.00% 4.00% 0% 3.00% Sample Furniture NHFA High Profit NHFA Average 2.00% Dealer Type 1.00% 0.00% st ril it r r r ne y ay ly e er be be be of ar ag gu Ap Ju ob Ju M Pr em m m nu er COGS Total Net Income Au ct ve ce Ja gh Av pt O No De Se Hi Analysis Congratulations! Your Net Income is Greater than the High Profit Dealer. Opportunity Congratulations! You have 1.93% more Net Income than the High Profit Dealer. The difference from your Net Income to a High Profit Dealer is $-81,200 per year. Definition Net Income (or loss) is the profit that you retain after all expenses are deducted. It is your bottom-line before year-end taxation. Tracking and improving this number should be your ultimate goal. Page 12 Prepared by PROFITconsulting Copyright PROFITsystems, Inc.

×