survey participants1 results – general4 2008 comparatives – all generals5 generals by size17...
TRANSCRIPT
Survey Participants 1
Results – General 42008 Comparatives – All Generals 5Generals By Size 17 Under $10 Million Revenue 18 $10 to $25 Million Revenue 30 Over $25 Million Revenue 42
Results – Subs 542008 Comparative Subs – All Trades 55Subs – By Trade 67 Electrical Contractors 68 Steel Fabricators/Erectors 80 Underground Contractors 92 Mechanical and HVAC Contractors 104 Concrete Contractors 116Subs – By Size 128 Under $2 Million Revenue 129 $2 to $10 Million Revenue 139 $10 to $25 Million Revenue 151 Over $25 Million Revenue 163
Acknowledgements 175
VonLehman & Company Inc.2008 Annual Survey of
Greater Cincinnati ContractorsTable of Contents
2
Survey Participants
3
Type of Contractor
10%8%
3%
9%
6%
36%
28%
Underground
Electrical
Steel Fab./Erectors
Mechanical & HVAC
Concrete
All Other Trades
Generals
33%
67%
UnionNon-Union
Union vs. Non-Union
4
Union vs. Non-Union
2004 2005 2006 2007 2008
Union 39
%
Non-Union 61%
Union 47
%
Non-Union 53%
Union 48
%
Non-Union 52%
Union 4
2%
Non-Union 58%
Union 33
%
Non-Union 67%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
5
Results - Generals
6
2008 Comparative – All Generals
7
0.6%
3.2%3.1%
2.3%
1.7%
2.9%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Under $10M
$10-25M
Over $25M
Avg Cinti Genera
l
CFMA Midwest
CFMA BIC < $50M
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
Net Earnings to RevenueGenerals (by Size)
8
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
Gross ProfitGenerals (by Size)
9
Operating Expenses to RevenueGenerals (by Size)
19.4%
8.3%
5.7%
11.2%
4.3%
7.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Under $10M
$10-25M
Over $25M
Avg Cinti Genera
l
CFMA Midwest
CFMA BIC < $50M
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
10
Operating Income to RevenueGenerals (by Size)
4.6%
3.3%
3.1%
3.7%
1.6%
2.8%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
Under $10M
$10-25M
Over $25M
Avg Cinti Genera
l
CFMA Midwest
CFMA BIC < $50M
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of
net sales. A contractor becomes healthier as this ratio becomes higher.
11
Current RatioGenerals (by Size)
1.5
1.4
1.31.4
1.21.3
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
Under $10M
$10-25M
Over $25M
Avg Cinti Genera
l
CFMA Midwest
CFMA BIC < $50M
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
12
Age of Accounts Receivable in DaysGenerals (by Size)
64.0
58.0
53.0 58
.7
48.0
46.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Under $10M
$10-25M
Over $25M
Avg Cinti Genera
l
CFMA Midwest
CFMA BIC < $50M
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that
receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
13
Retainage to Total Accounts ReceivableGenerals (by Size)
13.3%
19.1%
15.2% 16
.3%
14.3%
9.6%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Under $10M
$10-25M
Over $25M
Avg Cinti Genera
l
CFMA Midwest
CFMA BIC < $50M
Computation:A/R retainage divided by total accounts receivable
A/R RetainageTotal Accounts Receivable
Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.
14
Cash as a % of Total AssetsGenerals (by Size)
18.8%
24.1%
20.0% 21
.4% 21.6%
24.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Under $10M
$10-25M
Over $25M
Avg Cinti Genera
l
CFMA Midwest
CFMA BIC < $50M
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
15
Cost in Excess/Billings in ExcessGenerals (by Size)
99.1%
30.0%
22.2%
50.3%
19.7%
39.7%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Under $10M
$10-$25M
Over $25M
Avg Cinti Genera
l
CFMA Midwest
CFMA BIC < $50M
Computation:Cost in excess divided by billings in excess
Cost in ExcessBillings in Excess
Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.
16
Debt to EquityGenerals (by Size)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
17
Average Months in BacklogGenerals (by Size)
2.0
7.28.8
5.9
14.2
6.3
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Under $10M
$10-25M
Over $25M
Avg Cinti Genera
l
CFMA Midwest
CFMA BIC < $50M
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
18
GeneralsBy Size
19
Under $10 Million Revenue
20
Net Earnings to RevenueUnder $10M
0.9% 1.3
%
2.8%
5.2%
0.6% 2.2
%2.3
%
3.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA Under $10M
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
21
Gross ProfitUnder $10M
13.4%
16.7%
19.1%
17.3%
23.9%
18.1%
14.9%
12.9%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA Under $10M
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
22
Operating Expenses to RevenueUnder $10M
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
23
Operating Income to RevenueUnder $10M
2.5%
2.2%
5.9%
6.6%
4.6%
4.4%
3.7%
2.5%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA Under $10M
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of
net sales. A contractor becomes healthier as this ratio becomes higher.
24
Current RatioUnder $10M
1.6
2.3
1.6 1.8
1.51.8
1.4 1.4
0.0
0.5
1.0
1.5
2.0
2.5
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA Under $10M
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
25
Age of Accounts Receivable in DaysUnder $10M
64
48
54
31
64
5259
52
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA Under $10M
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that receivables
are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
26
Retainage to Total Accounts Receivable
Under $10M
32.0%
25.0%
13.6%
39.3%
13.3%
24.6%
16.3%
4.7%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA Under $10M
Computation:A/R retainage divided by total accounts receivable
A/R RetainageTotal Accounts Receivable
Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.
27
Cash as a % of Total AssetsUnder $10M
17.0%
28.0%
24.5%
32.3%
18.8%
24.1%
21.4% 22
.5%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA Under $10M
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
28
Cost in Excess/Billings in ExcessUnder $10M
19.0%
58.0%
22.6%
0.7%
99.1%
39.9%
50.3% 55
.8%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA Under $10M
Computation:Cost in excess divided by billings in excess
Cost in ExcessBillings in Excess
Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.
29
Debt to EquityUnder $10M
1.7
0.9
1.8
1.1
1.6
1.4
2.3 2.3
0.0
0.5
1.0
1.5
2.0
2.5
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA Under $10M
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
30
Average Months in BacklogUnder $10M
3.9
9.6
6.1
2.3 2.0
4.95.9
9.6
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA Under $10M
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
31
$10 to $25 MillionRevenue
32
Net Earnings to Revenue$10 to $25M
0.6%
-0.5%
0.7%
3.0%
3.2%
1.4%
2.3%
3.2%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA $10-25M
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
33
Gross Profit$10 to $25M
9.5%
9.1%
9.5% 10
.7% 11.6%
10.1%
14.9%
11.7%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA $10-25M
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
34
Operating Expenses to Revenue$10 to $25M
7.4%
8.8%
6.1% 6.6
%
8.3%
7.4%
11.2%
8.4%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA $10-25M
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
35
Operating Income to Revenue$10 to $25M
2.1%
0.3%
3.4%
4.1%
3.3%
2.6%
3.7%
3.2%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA $10-25M
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of
net sales. A contractor becomes healthier as this ratio becomes higher.
36
Current Ratio$10 to $25M
1.2 1.2 1.2
1.4 1.4
1.3
1.4 1.4
1.1
1.2
1.2
1.3
1.3
1.4
1.4
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA $10-25M
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
37
Age of Accounts Receivable in Days$10 to $25M
64 65
19
66
5854
59
44
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA $10-25M
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that
receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
38
Retainage to Total Accounts Receivable
$10 to $25M
19.6%
18.4%
27.9%
17.0%
13.3%
19.2%
16.3%
8.8%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA $10-25M
Computation:A/R retainage divided by total accounts receivable
A/R RetainageTotal Accounts Receivable
Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.
39
Cash as a % of Total Assets$10 to $25M
12.0%
11.2%
16.6%
12.5%
24.1%
15.3%
21.4%
24.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA $10-25M
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
40
Cost in Excess/Billings in Excess$10 to $25M
56.3%
85.4%
54.4%
22.6% 30
.0%
49.7%
50.3%
41.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA $10-25M
Computation:Cost in excess divided by billings in excess
Cost in ExcessBillings in Excess
Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.
41
Debt to Equity$10 to $25M
3.5
5.7
4.95.9
2.5
4.5
2.3
3.1
0.0
1.0
2.0
3.0
4.0
5.0
6.0
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA $10-25M
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
42
Average Months in Backlog$10 to $25M
5.9
10.0
5.25.9
7.26.8
5.9
7.6
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA $10-25M
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
43
Over $25 MillionRevenue
44
Net Earnings to RevenueOver $25M
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
45
Gross ProfitOver $25M
13.8%
11.7%
13.5%
9.1%
8.8%
11.4%
14.9%
9.6%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA over $25M
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
46
Operating Expenses to RevenueOver $25M
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
47
Operating Income to RevenueOver $25M
4.0%
2.8%
4.6%
3.0%
3.1%
3.5% 3.7
%
2.7%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA over $25M
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of
net sales. A contractor becomes healthier as this ratio becomes higher.
48
Current RatioOver $25M
1.1
1.4
1.3
1.21.3 1.3
1.4
1.3
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA over $25M
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
49
Age of Accounts Receivable in DaysOver $25M
48.0
72.0
69.0
53.0
53.0 59
.059
.0
48.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA over $25M
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that
receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
50
Retainage to Total Accounts Receivable
Over $25M
15.0%
12.0%
15.7%
11.9%
15.2%
14.0%
16.3%
10.4%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA over $25M
Computation:A/R retainage divided by total accounts receivable
A/R RetainageTotal Accounts Receivable
Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.
51
Cash as a % of Total AssetsOver $25M
8.0%
16.0%
14.8%
10.5%
19.9%
13.8%
21.4%
24.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA over $25M
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
52
Cost in Excess/Billings in ExcessOver $25M
13.0%
53.0%
37.7%
47.8%
22.2%
34.7%
50.3%
41.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA over $25M
Computation:Cost in excess divided by billings in excess
Cost in ExcessBillings in Excess
Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.
53
Debt to EquityOver $25M
2.6 2.4
2.93.4
2.52.8
2.3
3.1
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA over $25M
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
54
Average Months in BacklogOver $25M
5.8
8.8
5.9
5.1
8.8
6.9
5.9
7.1
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
20042005
20062007
2008
5 Year Average
Average Cinti Generals
CFMA over $25M
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
55
Results – Subs
56
2008 Comparative – Subs – All Trades
57
Net Earnings to RevenueSubs (by Trade)
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
58
Gross ProfitSubs (By Trade)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
59
Operating Expenses to Revenue
Subs (By Trade)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
60
Operating Income to RevenueSubs (By Trade)
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of net
sales. A contractor becomes healthier as this ratio becomes higher.
61
Current RatioSubs (By Trade)
0.0
0.5
1.0
1.5
2.0
2.5
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
62
Age of Accounts Receivable in Days
Subs (By Trade)
0
10
20
30
40
50
60
70
80
90
100
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that receivables
are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
63
Retainage to Total Accounts
Receivable Subs (By Trade)
0%
5%
10%
15%
20%
25%
30%
Computation:A/R retainage divided by total accounts receivable
A/R RetainageTotal Accounts Receivable
Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.
64
Cash as a % of Total AssetsSubs (By Trade)
0%
5%
10%
15%
20%
25%
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
65
Cost in Excess/Billings in Excess
Subs (By Trade)
0%
50%
100%
150%
200%
250%
300%
Computation:Cost in excess divided by billings in excess
Cost in ExcessBillings in Excess
Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.
66
Debt to EquitySubs (By Trade)
0.0
0.5
1.0
1.5
2.0
2.5
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
67
Average Months in BacklogSubs (By Trade)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
68
Subs – By Trade
69
Electrical Contractors
70
Net Earnings to RevenueElectrical Contractors
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
71
Gross ProfitElectrical Contractors
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
72
Operating Expenses to Revenue
Electrical Contractors
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
73
Operating Income to RevenueElectrical Contractors
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of net
sales. A contractor becomes healthier as this ratio becomes higher.
74
Current RatioElectrical Contractors
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
75
Age of Accounts Receivable in Days
Electrical Contractors
0
10
20
30
40
50
60
70
80
90
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that
receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
76
Retainage to Total Accounts
Receivable Electrical Contractors
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Computation:A/R retainage divided by total accounts receivable
A/R RetainageTotal Accounts Receivable
Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.
77
Cash as a % of Total AssetsElectrical Contractors
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
78
Cost in Excess/Billings in Excess
Electrical Contractors
0%
50%
100%
150%
200%
250%
Computation:Cost in excess divided by billings in excess
Cost in ExcessBillings in Excess
Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.
79
Debt to EquityElectrical Contractors
0.0
0.5
1.0
1.5
2.0
2.5
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
80
Average Months in BacklogElectrical Contractors
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
81
Steel Fabricators/Erectors
82
Net Earnings to RevenueSteel Fabricators/Erectors
8.7%
10.8%
4.2%
5.9% 6.3
% 7.2%
0.9%
5.2%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
20042005
20062007
2008
5 Yr. Average
Avg. Cinti S
ubs
CFMA Steel
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
83
Gross ProfitSteel Fabricators/Erectors
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
84
Operating Expenses to Revenue
Steel Fabricators/Erectors
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
85
Operating Income to RevenueSteel Fabricators/Erectors
11.1% 11
.2%
4.2%
7.3% 7.9
% 8.3%
2.5%
5.2%
0%
2%
4%
6%
8%
10%
12%
20042005
20062007
2008
5 Yr. Average
Avg. Cinti S
ubs
CFMA Steel
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of net
sales. A contractor becomes healthier as this ratio becomes higher.
86
Current RatioSteel Fabricators/Erectors
0.0
0.5
1.0
1.5
2.0
2.5
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
87
Age of Accounts Receivable in Days
Steel Fabricators/Erectors
0
20
40
60
80
100
120
140
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that
receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
88
Retainage to Total Accounts
Receivable Steel Fabricators/Erectors
12%
22%
11%
26% 27
%
20%
15%
10%
0%
5%
10%
15%
20%
25%
30%
20042005
20062007
2008
5 Yr. Average
Avg. Cinti S
ubs
CFMA Steel
Computation:A/R retainage divided by total accounts receivable
A/R RetainageTotal Accounts Receivable
Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.
89
Cash as a % of Total AssetsSteel Fabricators/Erectors
1%
7%
14%
1% 4%5%
15%
13%
0%
2%
4%
6%
8%
10%
12%
14%
16%
20042005
20062007
2008
5 Yr. Average
Avg. Cinti S
ubs
CFMA Steel
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
90
Cost in Excess/Billings in Excess
Steel Fabricators/Erectors
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Computation:Cost in excess divided by billings in excess
Cost in ExcessBillings in Excess
Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.
91
Debt to EquitySteel Fabricators/Erectors
0.0
0.5
1.0
1.5
2.0
2.5
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
92
Average Months in BacklogSteel Fabricators/Erectors
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
93
Underground Contractors
94
Net Earnings to RevenueUnderground
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
95
Gross ProfitUnderground
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
96
Operating Expenses to RevenueUnderground
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
97
Operating Income to RevenueUnderground
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of net
sales. A contractor becomes healthier as this ratio becomes higher.
98
Current RatioUnderground
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
99
Age of Accounts Receivable in Days
Underground
0
10
20
30
40
50
60
70
80
90
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that
receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
100
Retainage to Total Accounts
Receivable Underground
0%
5%
10%
15%
20%
25%
Computation:A/R retainage divided by total accounts receivable
A/R RetainageTotal Accounts Receivable
Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.
101
Cash as a % of Total AssetsUnderground
0%
2%
4%
6%
8%
10%
12%
14%
16%
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
102
Cost in Excess/Billings in Excess
Underground
0%
20%
40%
60%
80%
100%
120%
140%
Computation:Cost in excess divided by billings in excess
Cost in ExcessBillings in Excess
Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.
103
Debt to EquityUnderground
0.0
0.5
1.0
1.5
2.0
2.5
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
104
Average Months in BacklogUnderground
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
105
Mechanical and HVAC Contractors
106
Net Earnings to RevenueMechanical and HVAC
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
107
Gross ProfitMechanical and HVAC
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
108
Operating Expenses to Revenue
Mechanical and HVAC
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
109
Operating Income to RevenueMechanical and HVAC
0%
1%
2%
3%
4%
5%
6%
7%
8%
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of net
sales. A contractor becomes healthier as this ratio becomes higher.
110
Current RatioMechanical and HVAC
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
111
Age of Accounts Receivable in Days
Mechanical and HVAC
0
10
20
30
40
50
60
70
80
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that
receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
112
Retainage to Total Accounts
Receivable Mechanical and HVAC
0%
2%
4%
6%
8%
10%
12%
14%
16%
Computation:A/R retainage divided by total accounts receivable
A/R RetainageTotal Accounts Receivable
Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.
113
Cash as a % of Total AssetsMechanical and HVAC
0%
5%
10%
15%
20%
25%
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
114
Cost in Excess/Billings in Excess
Mechanical and HVAC
0%
10%
20%
30%
40%
50%
60%
70%
Computation: Cost in excess divided by billings in excess
Cost in ExcessBillings in Excess
Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.
115
Debt to EquityMechanical and HVAC
0.0
0.5
1.0
1.5
2.0
2.5
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
116
Average Months in BacklogMechanical and HVAC
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
117
Concrete Contractors
118
Net Earnings to RevenueConcrete
7.1%
5.7%
7.9%
3.3%
6.0%
0.9%
6.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
20052006
20072008
4 Yr. Average
Avg. Cinti S
ubs
CFMA Concrete
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
119
Gross ProfitConcrete
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
120
Operating Expenses to Revenue
Concrete
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
121
Operating Income to RevenueConcrete
0%
2%
4%
6%
8%
10%
12%
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of net
sales. A contractor becomes healthier as this ratio becomes higher.
122
Current RatioConcrete
0.0
0.5
1.0
1.5
2.0
2.5
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
123
Age of Accounts Receivable in Days
Concrete
0
10
20
30
40
50
60
70
80
90
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that
receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
124
Retainage to Total Accounts
Receivable Concrete
0%
5%
10%
15%
20%
25%
Computation:A/R retainage divided by total accounts receivable
A/R RetainageTotal Accounts Receivable
Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.
125
Cash as a % of Total AssetsConcrete
0%
5%
10%
15%
20%
25%
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
126
Cost in Excess/Billings in ExcessConcrete
0%
50%
100%
150%
200%
250%
300%
350%
Computation:Cost in excess divided by billings in excess
Cost in ExcessBillings in Excess
Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.
127
Debt to EquityConcrete
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
128
Average Months in BacklogConcrete
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
129
Subs – By Size
130
Under $2 Million Revenue
131
Net Earnings to RevenueUnder $2M
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
132
Gross ProfitUnder $2M
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
133
Operating Expenses to Revenue
Under $2M
0%
5%
10%
15%
20%
25%
30%
35%
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
134
Operating Income to RevenueUnder $2M
7.3% 7.4
%
3.2%
11.3%
-4.0%
5.0%
2.5%
3.8%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
20042005
20062007
2008
5 Yr. Average
Avg. Cinti S
ubs
CFMA Subs <$10M
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of net
sales. A contractor becomes healthier as this ratio becomes higher.
135
Current RatioUnder $2M
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
136
Age of Accounts Receivable in Days
Under $2M
0
10
20
30
40
50
60
70
80
90
100
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that
receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
137
Cash as a % of Total AssetsUnder $2M
0%
5%
10%
15%
20%
25%
30%
35%
40%
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
138
Debt to EquityUnder $2M
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
139
Average Months in BacklogUnder $2M
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
140
$2 to $10 Million Revenue
141
Net Earnings to Revenue$2 to $10M
3.2%
5.3%
4.2%
3.7%
0.9%
3.5%
0.9%
4.1%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
20042005
20062007
2008
5 Yr. Average
Avg. Cinti S
ubs
CFMA Subs <$10M
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
142
Gross Profit$2 to $10M
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
143
Operating Expenses to Revenue$2 to $10M
0%
5%
10%
15%
20%
25%
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
144
Operating Income to Revenue$2 to $10M
0%
1%
2%
3%
4%
5%
6%
7%
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of net
sales. A contractor becomes healthier as this ratio becomes higher.
145
Current Ratio$2 to $10M
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
146
Age of Accounts Receivable in Days
$2 to $10M
0
10
20
30
40
50
60
70
80
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that
receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
147
Retainage to Total Accounts
Receivable $2 to $10M
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Computation:A/R retainage divided by total accounts receivable
A/R RetainageTotal Accounts Receivable
Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.
148
Cash as a % of Total Assets$2 to $10M
0%
2%
4%
6%
8%
10%
12%
14%
16%
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
149
Cost in Excess/Billings in Excess$2 to $10M
0%
20%
40%
60%
80%
100%
120%
Computation:Cost in excess divided by billings in excess
Cost in ExcessBillings in Excess
Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.
150
Debt to Equity$2 to $10M
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
151
Average Months in Backlog$2 to $10M
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
152
$10 to $25 Million Revenue
153
Net Earnings to Revenue$10 to $25M
3.8%
4.6%
3.5% 3.6
%
1.6%
3.4%
0.9%
4.8%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
20042005
20062007
2008
5 Yr. Average
Avg. Cinti S
ubs
CFMA Subs $10-25M
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
154
Gross Profit$10 to $25M
14.5%
15.0%
15.5%
16.0%
16.5%
17.0%
17.5%
18.0%
18.5%
19.0%
19.5%
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
155
Operating Expenses to Revenue$10 to $25M
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
156
Operating Income to Revenue$10 to $25M
0%
1%
2%
3%
4%
5%
6%
7%
8%
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of net
sales. A contractor becomes healthier as this ratio becomes higher.
157
Current Ratio$10 to $25M
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
158
Age of Accounts Receivable in Days
$10 to $25M
0
20
40
60
80
100
120
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that
receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
159
Retainage to Total Accounts
Receivable $10 to $25M
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Computation:A/R retainage divided by total accounts receivable
A/R RetainageTotal Accounts Receivable
Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.
160
Cash as a % of Total Assets$10 to $25M
0%
2%
4%
6%
8%
10%
12%
14%
16%
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
161
Cost in Excess/Billings in Excess
$10 to $25M
0%
20%
40%
60%
80%
100%
120%
Computation:Cost in excess divided by billings in excess
Cost in ExcessBillings in Excess
Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.
162
Debt to Equity$10 to $25M
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
163
Average Months in Backlog$10 to $25M
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
164
Over $25 Million Revenue
165
Net Earnings to RevenueOver $25M
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Computation:This ratio is computed by dividing earnings before taxes by revenue
Net EarningsRevenue
Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.
166
Gross ProfitOver $25M
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Computation:This ratio is computed by dividing gross profit by revenue
Gross ProfitRevenue
Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.
167
Operating Expenses to Revenue
Over $25M
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Computation:Operating (selling and administrative) expenses divided by revenue
Operating ExpensesRevenue
Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.
168
Operating Income to RevenueOver $25M
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Computation: Operating income divided by revenueOperating Income
RevenueInterpretation:This graph depicts operating income as a percentage of
net sales. A contractor becomes healthier as this ratio becomes higher.
169
Current RatioOver $25M
0.00.10.20.30.40.50.60.70.80.91.01.11.21.31.41.51.61.71.8
Computation:Total current assets divided by total current liabilities
Current AssetsCurrent Liabilities
Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.
170
Age of Accounts Receivable in Days
Over $25M
0
10
20
30
40
50
60
70
80
Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365
SalesInterpretation:This figure expresses the average time in days that
receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.
171
Retainage to Total Accounts
Receivable Over $25M
0%
5%
10%
15%
20%
25%
30%
Computation:A/R retainage divided by total accounts receivable
A/R RetainageTotal Accounts Receivable
Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.
172
Cash as a % of Total AssetsOver $25M
1%
3%
7%
19%
12%
8%
15%
14%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
20042005
20062007
2008
5 Yr. Average
Avg. Cinti S
ubs
CFMA Subs $25-50M
Computation: Cash divided by total assets
CashTotal Assets
Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.
173
Cost in Excess/Billings in ExcessOver $25M
0%
10%
20%
30%
40%
50%
60%
Computation:Cost in excess divided by billings in excess
Cost in ExcessBillings in Excess
Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.
174
Debt to EquityOver $25M
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Computation: Total liabilities divided by total net worth
Total LiabilitiesTotal Net Worth
Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.
175
Average Months in BacklogOver $25M
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Computation:Twelve months per year times backlog divided by revenue
Backlog x 12Revenue
Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.
176
•The participants for the survey were selected from several databases listing contractors located in the Greater Cincinnati area. Financial information of 99 contractors is included, 28 of which are general contractors, and 71 that are subcontractors.
•The percentages depicted in all of these graphs are dependent upon how well the specific respondents in each size range or trade type did for the year, and may vary if another survey were performed, depending on the respondents to that survey.
•All Cincinnati averages shown in the survey are based on the weighted average as determined by the number of respondents in each category.
•Each category was deemed to have a population large enough to preserve of anonymity of all respondents involved.
ACKNOWLEDGEMENTS
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ACKNOWLEDGEMENTS
•In some instances, respondents that were deemed to be outliers were eliminated from the graphical presentation so as to protect the integrity of the data presented.
•In addition, the results of the survey were compared to the results of the Construction Financial Management Association’s (CFMA) 2008 Construction Industry Annual Financial Survey for the Midwest Region, specific industries and size, as well as the overall best in class.
©2008 by the CONSTRUCTION FINANCIAL MANAGEMENT ASSOCIATION. All rights reserved. Reprinted with the permission of CFMA.