Quick Printing

APR 2014

Quick Printing is the only business resource serving the quick and small commercial printing niche in North America. Quick Printing is the authoritative source for business information, emerging technologies, shop profiles and management insight.

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26 Q U I C K P R I N T I N G / A p r i l 2 0 1 4 w w w. M y P R I N T R e s o u r c e . c o m MONEY TALK operations, then measuring themselves against the most successful companies, Ratios participants found efficiency and productivity improvements that helped contain expenses, produce more billable work, and identify opportunities for rev- enue growth. Boelte-Hall, LLC, a printer in Roeland Park, KS, has used the Ratios for years. The company participates in a printing industry peer group that benchmarks performance of its members verses the industry profit leaders each year. Boelte- Hall is proud to say that benchmark- ing helps the group. "Through careful monitoring and managerial direction, many of us have joined the elite top 25 percent of industry profit generators. Turning a profits is not easy, but tools like the Ratios absolutely help." Steve Hall, Boelte-Hall. According to Donald A. Pizzenti, CFO, Cohber Press Inc., "We use the Ratios study to compare ourselves against other print- ers of our size regionally and nationally. Although all printers are unique in their own way, it is amazing how the [data] in the study is extremely accurate and can be used to help make decisions." As you can see, these companies find tangible benefits from participating in the Ratios—whether you are a long-time user or new a practitioner. Printers can regularly compare themselves to compa- nies from across the US and Canada, of a variety of sizes, which produce a variety of graphic arts products: sheetfed print, web print, digital print, labels, newspa- pers, magazines, and books as well as general commercial print. There is even a series for binders. What's best, participa- It may be difficult to believe the impact that a manage- ment tool can have on profitability. By Stuart Margolis comparison to and interpretation of the Ratio data. An example of this standard- ized reporting format is as follows: List your Value Added (VA) calculation on the face of your internal financial statements. VA = Sales – Material Costs. It reveals the actual value you added to the paper, the ink, the finishing, etc. By excluding pass through expenses such as expensive paper or outside bindery costs, you will be able to focus on varia- tions of in-plant manageable expenses such as factory expenses, factory payroll, and administrative/selling expenses that need to be tightly managed on every job. For Example: Calculate most of your Ratios as a % of VA, not as a % of Sales. Using VA as the basis of ratio calculation has his- torically provided a better benchmark for monitoring costs and profit. For example, most industry studies have shown that P rinters and others in the graphic arts business demonstrate that the Printing Industries of America Ratios studies play a signifcant role in the growth and success of their frms. By reviewing key informa- tion from the company's Take the Steps towards Greater Profitability for Your Company Sample Industry Standard Financial Statement Based on Sales and Value Added Sales $1,000,000 100.00% Factory Cost of Product Materials Paper 195,600 19.56 Other chargeable materials 51,500 5.15 Outside Services 85,300 8.53 Total Materials 332,400 33.24 Value Added = Sales — $1.0 million less Materials — $332,400 = .............$667,600 100.00% Factory Payroll 256,200 25.62 38.38 Factory Expenses 170,800 17.08 25.58 Total Factory Cost of Product 759,400 75.94 63.96 Gross Profit 240,600 24.06 36.04 Administrative and Selling Expenses Administrative Expenses 100,300 10.03 15.02 Selling Expenses 97,400 9.74 14.59 Total Administrative and Selling Expenses 197,700 19.77 29.61 Income Before Interest Expense 42,900 4.29 6.43 Interest Expense 17,900 1.79 2.68 Operating Income 25,000 2.50 3.75 Other Income 5,100 0.51 0.76 Income Before Income Taxes 30,100 3.01% 4.50% Amount % of % of Sales Value Added (continued on page 37) tion in the ratio program is free. Hundreds of companies have found that the Ratios helped their company ro become more efficient, more productive, more confident, more focused, better managed, and more profitable. All of which adds up to a company that is, on average, eight times more profitable than the competition! To most effectively use the PIA Ratio Studies as a benchmark, here are some tips. Use industry standard formatting for your financial statements to facilitate QP_26_0414 MoneyTalk.indd 26 3/18/14 3:57 PM

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