Chinese restaurant
[96-812.0103] Sector: Retail
Firms Analyzed: 62
Contents
P1: 3-year Income-Expense statement- dollar-based
P2: 3-year Income-Expense statement- percentage-based
P3: 3-year Annual Cash Flow
P4: 3-year Monthly Cash Flow
P5: Financial Ratios - Cash Flow-Solvency
P6: Financial Ratios - Profitability
P7: Financial Ratios - Efficiency
P9: About the Data
The Sole Proprietor/Startup Profit & Loss series mirrors the more streamlined financial reports of many
startup firms and sole proprietorships. Startups which are not structured as Sole Proprietorships, and SPs
desiring a corporate-style balance sheet analysis, can utilize the small business and lower sales class
versions of the Industrial Financial Profile series.
Dollar-based sales and other dollar-based data in this report reflect averages for sales of the industry
segment, not total industry-wide averages. As a result, sales levels may vary from year to year, depending
on the mix of firms that a relisted as startups (single site firms with one year or less of operation) or sole
proprietorships. Because most startups are also sole proprietorships, the sole proprietor reporting format is
used for our startup financial series as well.
Annual Average Sales, Income & Expense ($)
as of:
Sales
Inventory (% Sales)
Cost of Sales
COS-Labor Portion
Gross Profit
Salary-Wages
2005
2006
2007
163,043
197,727
179,032
2,397
3,045
2,972
62,120
63,095
54,086
3,690
3,949
4,791
100,924
134,633
124,947
25,630
33,851
29,522
Contract Labor-Commissions
1,092
1,325
1,862
Rent
11,054
13,169
12,729
3,240
Advertising
2,478
3,421
Benefits-Pension
326
435
376
Insurance (non-health)
2,641
3,974
3,312
Taxes paid
7,060
8,542
7,484
Other SG&A Exp.
25,826
36,125
36,182
EBITDA
24,817
33,791
30,240
Interest paid
1,353
2,175
1,934
Home Office Expense
212
198
215
Amort. & Dep.
4,125
5,615
4,422
Total Expenses
81,799
108,829
101,279
Net Profit
19,127
25,803
23,669
Total Direct Labor & NP
49,539
64,928
59,844
Annual Average Sales, Income & Expense (%)
as of:
Sales
Inventory (% Sales)
Cost of Sales
COS-Labor Portion
Gross Profit
2005
2006
2007
100.0%
100.0%
100.0%
1.47%
1.54%
1.66%
38.10%
31.91%
30.21%
2.26%
2.00%
2.68%
61.90%
68.09%
69.79%
Salary-Wages
15.72%
17.12%
16.49%
Contract Labor-Commissions
0.67%
0.67%
1.04%
Rent
6.78%
6.66%
7.11%
Advertising
1.52%
1.73%
1.81%
Benefits-Pension
0.20%
0.22%
0.21%
Insurance (non-health)
1.62%
2.01%
1.85%
Taxes paid
4.33%
4.32%
4.18%
Other SG&A Exp.
15.84%
18.27%
20.21%
EBITDA
15.22%
17.09%
16.89%
Interest paid
0.83%
1.10%
1.08%
Home Office Expense
0.13%
0.10%
0.12%
Amort. & Dep.
2.53%
2.84%
2.47%
Total Expenses
50.17%
55.04%
56.57%
Net Profit
11.73%
13.05%
13.22%
Total Direct Labor & NP
30.38%
32.84%
33.43%
Inventory (% Sales): The stockpile of unsold products. Unlike corporate reports which show inventory as a
percent of total assets, the sole proprietorship financial format displays Inventory as a percent of Sales.
Cost of Sales includes materials and labor involved in the direct delivery of a product or service. Other costs are
included in the cost of sales to the extent that they are involved in bringing goods to their location and condition
ready to be sold. Non-production overheads such as development costs may be attributable to the cost of goods
sold. The costs of services provided will consist primarily of personnel directly engaged in providing the service,
including supervisory personnel and attributable overhead.
COS-Labor Portion: This reporting format details labor from the materials and delivery portion of the total Cost of
Sales.
Gross Profit represents direct operating expenses plus net profit. In addition to the labor portion of Cost of Sales,
wage costs are reflected in the Officers Compensation and Wages-Salary line items. The Contract LaborCommissions line item is reserved for non-employee labor, sales and related costs. In many cases, SG&A
(Sales, General and Administrative) costs also include some overhead, administrative and supervisory wages.
The Taxes line item includes the employer portion of payroll tax on wages taken during the year as well as other
paid-in tax items. Sole Proprietorships do not accrue federal business income taxes; Instead, Net Profit is
assessed as owner’s wages. As a result, the Net Profit line item represents what is commonly referred to as Pretax Net Profit or Net Profit Before Tax. Although it is a controversial measure, the EBITDA line item (Earnings
before interest, taxes, depreciation and amortization) adds back Interest Paid, Depreciation-Amortization and
Home Office expense to reduce the effect of “paper expenses” and accounting decisions on the bottom line of the
Profit and Loss Statement. Since some firms utilized EBITDA is to “add back” non-cash and flexible expenses which
may be altered through credits and accounting procedures (such as income tax), paid-in income taxes from the
Taxes Paid line item are not added back in the EBITDA calculation.
Rent covers the rental cost of any business property, including land, buildings and equipment.
Insurance (non-health) costs include business liability and property insurance, but exclude employee health
insurance, which is covered under the Benefits-Pension line item.
Advertising includes advertising, promotion and publicity for the reporting business, but not on behalf of others.
Benefits-Pension includes, but is not limited to, employee health care and retirement costs.
In addition to varying proportions of overhead, administrative and supervisory wages, some generally more minor
expenses, including repairs and written-off debt, are aggregated under SG&A (Sales, General and Administrative).
The Total Direct Labor & NP line is developed to indicate overall labor costs, aggregating them as a percentage
indicator for one-person sole proprietorships as well as larger operations. Total Direct Labor & NP sums the labor
portion of Cost of Sales, Salary-Wages, Contract Labor-Commissions and Net Profit line items.
Cash Flow
Annual Cash Flow ($)
Jan-06
Jan-07
Jan-08
163,043
197,727
179,032
62,120
63,095
54,086
Gross Profit
100,924
134,633
124,947
All Direct Expenses
Year ending:
Sales
Cost of Sales
139,582
166,111
150,728
Net Cash
23,464
31,616
28,306
Net Cash & Labor
53,876
70,741
64,481
Annual Cash Flow (%)
Net Cash/Sales
14.39%
15.99%
15.81%
Net Cash/Cost of Sales
37.77%
50.11%
52.34%
Net Cash/Gross Profit
23.25%
23.48%
22.65%
Net Cash/All Direct Expenses
16.81%
19.03%
18.78%
100.00%
100.00%
100.00%
43.55%
44.69%
43.90%
Net Cash
Net Cash/Net Cash & Labor
All Direct Expenses includes Cost of Sales plus Total Expenses from the P1 Income & Expense table, less
largely non-cash Amortization, Depreciation and Home Office expenses. Net Cash adds back these non-cash
expenses. This generally offers a more comprehensive picture of owner compensation, which will also vary with the
actual proportion of owner labor.
Monthly Cash Flow tables on the following page are calculated on a straight-line sales basis. Different sales
patterns alter monthly cash flow (but not annual totals).
Monthly Cash Flow Table: Year ending 2005
Jan
Retained Cash
Feb
1,955
March
April
3,910
5,865
May
7,820
June
July
Aug
Sep
Oct
Nov
Dec
9,775 11,730 13,685 15,640 17,595 19,550 21,505
Income
13,587
13,587 13,587 13,587 13,587 13,587 13,587 13,587 13,587 13,587 13,587 13,586
Available Cash
13,587
15,542 17,497 19,452 21,407 23,362 25,317 27,272 29,227 31,182 33,137 35,092
Cost of Sales
Gross Profit
All Direct Exp.
5,177
8,410
11,632
5,177
5,177
5,177
5,177
5,177
5,177
5,177
5,177
5,177
5,177
5,173
8,410
8,410
8,410
8,410
8,410
8,410
8,410
8,410
8,410
8,410
8,414
11,632 11,632 11,632 11,632 11,632 11,632 11,632 11,632 11,632 11,632 11,630
Net Cash
1,955
3,910
Net Cash & Labor
4,489
8,978 13,467 17,956 22,445 26,934 31,423 35,912 40,401 44,890 49,379 53,876
5,865
7,820
9,775 11,730 13,685 15,640 17,595 19,550 21,505 23,464
Monthly Cash Flow Table: Year ending 2006
Jan
Retained Cash
Feb
2,634
March
April
5,268
May
June
July
Aug
Sep
Oct
Nov
Dec
7,902 10,536 13,170 15,804 18,438 21,072 23,706 26,340 28,974
Income
16,477
16,477 16,477 16,477 16,477 16,477 16,477 16,477 16,477 16,477 16,477 16,480
Available Cash
16,477
19,111 21,745 24,379 27,013 29,647 32,281 34,915 37,549 40,183 42,817 45,451
Cost of Sales
5,258
5,258
5,258
5,258
5,258
5,258
5,258
5,258
5,258
5,258
5,258
5,257
Gross Profit
11,219
11,219 11,219 11,219 11,219 11,219 11,219 11,219 11,219 11,219 11,219 11,224
All Direct Exp.
13,843
13,843 13,843 13,843 13,843 13,843 13,843 13,843 13,843 13,843 13,843 13,838
Net Cash
2,634
Net Cash & Labor
5,894
5,268
7,902 10,536 13,170 15,804 18,438 21,072 23,706 26,340 28,974 31,616
11,789 17,684 23,579 29,474 35,369 41,264 47,159 53,054 58,949 64,844 70,741
Monthly Cash Flow Table: Year ending 2007
Jan
Retained Cash
Feb
2,358
March
4,716
April
7,074
May
June
July
Aug
Sep
Oct
Nov
Dec
9,432 11,790 14,148 16,506 18,864 21,222 23,580 25,938
Income
14,919
14,919 14,919 14,919 14,919 14,919 14,919 14,919 14,919 14,919 14,919 14,923
Available Cash
14,919
17,277 19,635 21,993 24,351 26,709 29,067 31,425 33,783 36,141 38,499 40,857
Cost of Sales
4,507
4,507
4,507
4,507
4,507
4,507
4,507
4,507
4,507
4,507
4,507
4,509
Gross Profit
10,412
10,412 10,412 10,412 10,412 10,412 10,412 10,412 10,412 10,412 10,412 10,415
All Direct Exp.
12,561
12,561 12,561 12,561 12,561 12,561 12,561 12,561 12,561 12,561 12,561 12,557
Net Cash
2,358
Net Cash & Labor
5,373
4,716
7,074
9,432 11,790 14,148 16,506 18,864 21,222 23,580 25,938 28,306
10,746 16,119 21,492 26,865 32,238 37,611 42,984 48,357 53,730 59,103 64,481
financial ratios: Cash Flow-Solvency
as of:
net cash/sales %
net cash turnover (X)
2005
2006
2007
14.39
15.99
15.81
6.95
6.25
6.32
Net Cash: Sales: (Retained Cash plus Net Profit) divided by Sales. Adds back non-out of pocket items (e.g.,
depreciation, amortization, home office) which show as expenses but largely do not reduce liquid assets.
Net Cash Turnover: Sales divided by Cash. Cash totals taken from the Cash Flow table less out of pocket
expenses. Results too far from the benchmark may indicate overly conservative or aggressive liquidity policies.
financial ratios: Profitability
2005
2006
2007
gross profit: sales
61.90
68.09
69.79
EBITDA: sales
15.22
17.09
16.89
return on sales (%)
11.73
13.05
13.22
as of:
Gross Profit: Sales: Gross Profit: divided by Annual Sales. This is the profit ratio before direct expenses. This
ratio can indicate the "play" in other expenses which could be adjusted to increase the Net Profit margin.
EBITDA: Sales: Earnings Before Interest, income taxes due, Depreciation and Amortization divided by Sales.
EBITDA: Sales is a relatively controversial (and often criticized) metric designed to eliminate the effect of finance
and accounting decisions when comparing companies and industry benchmarks. Tax credits and deferral
procedures and non-cash expenditures (Amortization and Depreciation) are not deducted from the profit equation,
as are interest expenditures. In the case of sole proprietor reporting formats, the “before tax” refers to owner
federal income taxes resulting from Net Profit, rather than federal corporate income taxes.
Return on Sales: Net Profit divided by Annual Net Sales, indicating the level of profit from each dollar of sales.
Income taxes attributable to the Net Profit portion of proprietor income have not been deducted from Net Profit.
This ratio can be used as a predictor of the company's ability to withstand changes in prices or market conditions.
The ratio is often higher for startups and sole proprietorships due to owner compensation draws accounted as net
profit.
financial ratios: Efficiency:
2005
2006
2007
cost of sales: inventory (x)
25.92
20.72
18.20
days inventory
14.08
17.62
20.06
EBITDA: interest
18.34
15.54
15.64
inventory turnover
68.02
64.94
60.24
total labor: sales
18.65
19.79
20.21
as of:
Cost of Sales: Inventory: Cost of Sales divided by Inventory. This ratio reflects the number of times inventory is
turned over during the course of the year. High levels can mean good liquidity or sales, or shortages requiring
better management. Low levels may indicate poor cash flow or overstocking.
Days Inventory: 365 divided by (Cost of Sales: Inventory): Shows the average number of days of items in
inventory. Positive inventory balance will align most closely with industry benchmarks.
EBITDA: Interest: Earnings before Interest, income axe due, Depreciation and Amortization divided by Interest
expense. This ratio assesses financial stability by examining whether a company is at least profitable enough to
pay interest expense. A ratio >1.00 indicates it is. See cautions in the listing for EBITDA.
Inventory Turnover: Sales divided by Inventory. Target at or slightly above industry level. This ratio indicates
how quickly inventory turns over. Ratios below the industry norm suggest high levels of inventory. High ratios
could indicate product levels insufficient to satisfy demand in a timely manner.
Total Labor: Sales: All direct compensation costs as a percentage of sales, including the labor cost portion of cost
of sales, salary & wages, contract labor and commissions. Net Profit is also included for sole proprietorship and
most startup operations because it is considered owner compensation.
About the Data
Raw data analyzed for BizMiner reports is sourced from an array of the nation's private government statistical
sources, including the IRS, various Economic Census reports, Bureau of Labor Statistics data, commercial real
estate surveys, state revenue departments, business databases, credit reporting agencies and directories. None of
these raw data sources creates the final measures reflected in BizMiner industry profiles. In total, BizMiner
accesses over half a billion sourced data points from eighteen million business operations for each of its twice
annual updates. Existing data and BizMiner algorithms are used to inform and test projections for non-reporting
firms.
At the same time, some firms are missed and specific information on others is lacking from the database.
However, the overall current coverage of the databases approaches 12 million business operations annually. While
100% firm coverage is desirable for analysis purposes, the greatest value of the content rests in discerning
patterns of activity, which are reflected in the large samples used to develop our reports. As is the case with any
databases this large, some errors are inevitable. No representation is made as to the accuracy of the databases
utilized or the results of subsequent analyses.
Sales volume figures are for firms identifying this as their primary classification. For example, a report for retail
furniture stores analyzes sales of stores whose predominant revenue stream is furniture sales; that data would not
include furniture sold at a general department store. Firms in more detailed industry segments may opt to identify
a higher level parent classification as their primary line of business, effectively reducing sales applied to the
detailed segment.
It is sometimes difficult to ascertain precise sales data for the smallest firms in the databases. When precise
numbers are not available, reports that offer a sales range may be utilized. When there is a very small number of
firms in a category (most often startups, which are by nature often micro-firms) the sales is recorded at 150,000
(reflecting a 100,000-175,000 range).
Survival and sales analysis of independent business operations are based on information supplied largely by
business owners and representatives to private reporting services. Inaccurate information supplied by business
owners or representatives may affect the analysis. Survival rates assume that the discontinuation of a facility's
presence among credit reporting databases utilized reflects the discontinuation of operations of that facility. Where
insufficient data is available to create specific line items in specific industry reports, projections developed through
proprietary algorithms, including projections from broader industry data, may be utilized.
The Time Series: Our Profiles are adjusted to account for time lags in raw data. We adjust the time series to
compensate, and the dates shown in the reports generally reflect the actual time series shown in each Profile.
Neither the Brandow Company nor its resellers are responsible for conclusions drawn or decisions made based
upon this data or analysis. In no event will the Brandow Company or its resellers be liable for any damages, direct,
indirect, incidental or consequential resulting from the use of the information contained in BizMiner reports.
BizMiner
2601 Market Street
Camp Hill, PA 17011
717-909-6000
fax: 717-763-1232
© 1998-2008 The Brandow Company. All rights reserved.
www.bizminer.com
services@bizminer.com