Low profit margins can be considered a hidden cost in the form of lost opportunity. The Annual Survey Report contains marketing statistics, which can prove helpful in this regard. It lists sales and gross profit margins by sales category. By comparing your figures with the group average, you can see which ones need improvement, and how you can increase your total gross profit by improving the product mix.
Improving your financial ratios can have a beneficial effect on profitability. Examples are reduction in collection period and increasing the inventory turnover rate. This will increase your cash flow substantially, and enable you to pay your bills earlier, take a greater amount of cash discounts, and invest the extra cash in income producing paper.
Making use of the Dealer-Fit Annual Survey and other tools provided by IDA will help you reduce hidden costs and increase profitability. These are provided by IDA to its member at no extra cost. To obtain the Dealer-Fit Chart of Accounts and other control procedures, contact the IDA office to request the Yellow Packet. |
