How You Doin'?
In relation to gross profits, how does your compensation compare with that of others in your industry? It's a question the IRS asks when reviewing tax returns. Or try this question: Are your profit margins in line with similar businesses in your asset group? Or this: Is the average duration of your account receivable normal for your industry?
Few business owners can answer those questions, but the answers are available in Industry Spotlight (Schonfeld & Associates, $34.99, 800-205-0030, www.saibooks.com). The annual publication, customized for any one of more than 150 industries, contains statistical information derived from income statements and balance sheets of more than 95,000 tax returns, says Carol J. Greenhut, president of the Riverwoods, Illinois, publishing firm. "It's a reliable information source that can be used to do competitive research, perform self-audits or evaluate information on your tax returns before filing," she adds.
Industry Spotlight, which includes key ratios and percentages, provides clear benchmarks of financial performance, including profit margins, inventory turnover, bad debts to receipts, pension expense and other financial data. It may prove invaluable as a competitive tool and as a measure of your own performance. "Business owners can assess if they are paying too much to employees," Greenhut suggests. "If they maintain an inventory, they can compare turnover ratios with those of competitors. They can look at industry averages for a variety of expenses."
For the industry you select when ordering, information is reported for all firms within the industry and for companies in up to 11 asset size classes, from $1,000 on up. Within each size class, a complete set of information is shown for both profitable companies and companies with losses.
Paul DeCeglie (MrWritePDC@aol.com) is a former staff reporter for Journal of Commerce and American Banker.
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