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Discussion in 'Irrigation' started by Darb, Dec 25, 2002.
What do you estimate is the percent that involves irrigation work in your business?
Are you talking installs or service.
new construction: 7.9%
all stated as a percent of gross, with regards... devildog
45 % new construction
3 % service
Irrigation work: 100% of gross
New installs / renovations / contracting : 40%
40% of my whole business.
Not surprised so few have responded..... but sad so few know or care about bench marking their sales with others. For those who have posted or viewed, what do your irrigation purchases amount to; in percentage of your annual cost of sales ?
Ours was 16% (our fiscal year runs from Oct to Oct)
With Regards... devildog
Ours sits right at 16 percent of our total revenue. However, it is skewed a little bit and is probably a little lower than that due to poor recordkeeping in that department. That is one of the things to change. I already have our chart of accounts broken down quite a bit, however, that area is only broken down as parts for service vans and parts for contracting. Sometimes....and I stress sometimes.....some plants / gravel / etc. may get tossed in on the same invoices because our supplier sells other stuff too.
My fault I know, but......hey after 10 years in business, I am still learning. 3 years ago I couldnt have told you anything!
BTW....I would like to get this number down a little...I think I carry too much stock on the service trucks.
Does anyone have an UNOFFICIAL inventory system. I dont really want to keep an official inventory......reporting that on taxes is a *****. Thanks.
aren't irrigation purchases and cost of sales the same thing. I only track purchases against sales in that catergory. labor splh( sales per labor hour) and labor percent of sales, Gross profit based on retail selling price. and last but not least , contribution to overhead. and doesnt a fiscal year run from Oct 1 to Sept 30th
Profit-oriented entities must calculate their taxable income and pay an income tax based on that income, according to generally accepted accounting principles. With one minor exception, which is calculating cost of sales, entities do not have to measure their financial accounting income according to the rules the Internal Revenue Service published for calculating taxable income. It is an accepted legal principle that entities are entitled to calculate their taxable income according to whatever legitimate method results in the lowest income tax. The objective of measuring financial accounting income is quite different - you want to calculate income in the way that shows what actually has happened in such a way as to determine if our sales (revenues) where throughout the chart of accounts .
REVENUE: are associated with operations (sales) during a period are called revenues--for example, fertilizer app. The difference between the revenues of a period and the expenses of a period is the income for the period (also called profit or earnings). If the difference between revenues and expenses is negative, you have a loss. Most accounting methods contains an account for each type of revenue--for example, Sales Revenue--and for each type of expense--for example, Salary Expense. The rules for debits and credits to these accounts are the same as those for equity accounts because revenue and expense accounts are subdivisions of equity.
COST OF SALES: Many landscape firms are involved in the sale of merchandise (the fertilizer app above), it is important that the cost of merchandise sold be "matched" with the revenue earned from the sale of this merchandise. Unless you report both revenue and cost amounts for a particular item of merchandise in the same month, income can be seriously distorted. Also, the gross margin, which is the difference between sales revenue and cost of sales, will be incorrect. Your gross margin is an important monitor.
Another method of finding the cost of sales is called the retail method. You know the markup, that is, the percentage that you add to the cost of merchandise in order to arrive at the retail-selling price. For a company that sells landscape / irrigation installation or retail nursery, the cost of sales is important; companys who only service (ie only those who mow, blow and go) and do not fert, mulch etc (sub it out) do not have this problem.
GROSS PROFIT: Simply stated is your sales revenue minus the cost of sales for a specific period. Gross profit can be affected by a combination of changes; your selling price of a product growing and marketing costs for a product; the cost of goods purchased nurserys or irrigation vendors; the cost of services from subs and
any variations in the product or services mix of your landscape operations.
EXPENSES: Represent the costs and liabilities incurred to produce revenues. The assets surrendered or consumed when serving customers indicate company expenses. If income exceeds expenses, net income results. If expenses exceed income, the business is said to be operating at a net loss. See also Net Income
NET INCOME: (AKA PROFIT) is your sales minus cost of sales minus expenses including taxes.
These 5 categories are those you will see on accepted on all income statements. Regretfully, others (for income/budget purposes) such such as the EGO; GROWTH; INFLATION & PERCENT are also used and only end distoring an otherwise simple process.
If you wish to distort your ledgers and chart of accounts with other ratios or methods as discribed, go ahead... its your biz, who knows you too may become famous for creative accounting methods like WorldCom and Enron. with regards... devildog