2015 IWDC Owners Meeting

Transcription

1 2015 IWDC Owners Meeting

2 The Real Profit Drivers

3 The Real Profit Drivers Prepared For IWDC

4 The Real Profit Drivers Presented By Al Bates

5 Objectives Of The Session Review the Profit Structure of the Industry Identify the Two Key Pressure Points in Improving Profitability Develop an Action Plan to Improve Financial Performance Exhibit 1 5

6 Financial Results For Mountain View, Inc. Dollars Percent Net Sales 10,000, Cost of Goods Sold 5,500, Gross Margin 4,500, Exhibit 2 6

7 Financial Results For Mountain View, Inc. Dollars Percent Net Sales 10,000, Cost of Goods Sold 5,500, Gross Margin 4,500, Payroll and Fringes 2,500, All Other Expenses 1,500, Total Expenses 4,000, Exhibit 2 7

8 Financial Results For Mountain View, Inc. Dollars Percent Net Sales 10,000, Cost of Goods Sold 5,500, Gross Margin 4,500, Payroll and Fringes 2,500, All Other Expenses 1,500, Total Expenses 4,000, Profit Before Taxes 500, Exhibit 2 8

9 Financial Results For Mountain View, Inc. Dollars Percent Net Sales 10,000, Cost of Goods Sold 5,500, Gross Margin 4,500, Payroll and Fringes 2,500, All Other Expenses 1,500, Total Expenses 4,000, Profit Before Taxes 500, Fixed Expenses 3,500,000 Variable Expenses 500, Exhibit 2 9

10 Financial Results For Mountain View, Inc. Dollars Percent Net Sales 10,000, Cost of Goods Sold 5,500, Gross Margin 4,500, Payroll and Fringes 2,500, All Other Expenses 1,500, Total Expenses 4,000, Profit Before Taxes 500, Fixed Expenses 3,500,000 Variable Expenses 500, Exhibit 2 10

11 Financial Results For Mountain View, Inc. Dollars Percent Net Sales 10,000, Cost of Goods Sold 5,500, Gross Margin 4,500, Payroll and Fringes 2,500, All Other Expenses 1,500, Total Expenses 4,000, Profit Before Taxes 500, Fixed Expenses 3,500,000 Variable Expenses 500, Exhibit 2 11

12 The Recent Trend In Profit Margin P B T-- % Year Exhibit 3 12

13 The Recent Trend In Profit Margin P B T-- % Year Exhibit 3 13

14 An Improvement Path For Profit Margin P B T-- % Year Exhibit 4 14

15 A Fool s Path For Profit Margin P B T-- % Year Exhibit 4 15

16 An Improvement Path For Profit Margin P B T-- % Year Exhibit 4 16

17 Summary And Conclusions A realistic profit goal is a 10.0% PBT, but probably over a five-year period Exhibit 27 17

18 Exhibit 5 The Do Three Things Well Model: The Impact on PBT Sales Sales Oper. Inv. Impact on Resulting Number Size Growth GM Exp. DSO Turn PBT PBT of Firms

19 Exhibit 5 The Do Three Things Well Model: The Impact on PBT Sales Sales Oper. Inv. Impact on Resulting Number Size Growth GM Exp. DSO Turn PBT PBT of Firms

20 Exhibit 5 The Do Three Things Well Model: The Impact on PBT Sales Sales Oper. Inv. Impact on Resulting Number Size Growth GM Exp. DSO Turn PBT PBT of Firms

21 Exhibit 5 The Do Three Things Well Model: The Impact on PBT Sales Sales Oper. Inv. Impact on Resulting Number Size Growth GM Exp. DSO Turn PBT PBT of Firms

22 Strategic Profit Model Ratios You Can t Know Where You Are If You Don t Benchmark Your Firm Inspect Fair Good Strong Profit Margin (pre-tax %) 3.0 Asset Turnover (times) 2.7 Return On Assets (pre-tax %) 8.1 Financial Leverage (times) 1.4 Return On Net Worth (pre-tax %) 11.3 Income Statement Sales Volume ($ millions) Total Gross Margin (%) 25.0 Payroll Expenses (%) 13.0 All Other Operating Expenses (%) 9.0 Total Operating Expenses (%) 21.0 Profit Before Taxes (%) 3.0 Gross Margin (% of Sales) Warehouse (stocked items) 27.5 Special Orders 24.0 Drop Shipments 10.0 Exhibit 6 22

23 Strategic Profit Model Ratios You Can t Know Where You Are If You Don t Benchmark Your Firm Inspect Fair Good Strong Profit Margin (pre-tax %) 3.0 Asset Turnover (times) 2.7 Return On Assets (pre-tax %) 8.1 Financial Leverage (times) 1.4 Return On Net Worth (pre-tax %) 11.3 Income Statement Sales Volume ($ millions) Total Gross Margin (%) 25.0 Payroll Expenses (%) 13.0 All Other Operating Expenses (%) 9.0 Total Operating Expenses (%) 21.0 Profit Before Taxes (%) 3.0 Gross Margin (% of Sales) Warehouse (stocked items) 27.5 Special Orders 24.0 Drop Shipments 10.0 Exhibit 6 23