Other important ratios –These are operational not found in the P/L or Balance Sheet.
Revenue per Customer
This ratio was mentioned earlier but also belongs in the other important ratio category as it is one that is extremely important.
Direct Labor %
Tech labor divided by revenue. I have often said 3 things make profitability in this business: direct labor, advertising and materials. Keep them in line and we have profits. Keep any one of them out of line and we don’t.
# of Office people to production people
How effective is the office staff at controlling one of the three biggies mentioned above?
What % of revenue are you spending on marketing? Is it producing increased revenue? Is it being measured? Rather than looking at marketing spend as a percentage of total revenue a more useful ratio would be to look at marketing spend over new sales generated by the spend.
|OTHER IMPORTANT RATIOS||FORMULA|
|Revenue per Customer||Revenue / # of Customers|
|Direct Labor %||Direct Labor / Revenue|
|# of Office People to Production People||# Office People / # Production People|
|Marketing Expenditure||Total Marketing Spend / Revenue|
|DESCRIPTION||COMMERCIAL||RESIDENTIAL||WOOD DESTROYING||BED BUG||OTHERS|
|Revenue Per Customer||$1,439||$418||$793||$702||$847|
|Direct Labor %||20.20%|
|# of Office People to Production People||4.1|