I was wondering if anyone could point me in the direction of financial ratio benchmarks for the custom install industry?

Example: Current Ratio, Quick Ratio, Gross Margin, Inv. Turnover, Working Capital.

I really wish that more people would ask about the financial part of the business, as an indicator that it's being watched.

Please take a look at www.cedia.org. They would be the best first place to start.

That is the problem. They don't ask, they just open up shop and become one of them home theater experts.
"You know there's money to be made installing those speakers and tv's, and that structured wire stuff"

Yes, my point as well. It is not limited to this industry; there is no law against starting any business that you have no business being in.

I can talk a bit about the specifics of the original question, but not on a public forum. Dolfan, can you enroll over at www.integrationpros.com and post this question there?

Also try Residential Systems online at www.resmagonline.com and CEPro online at www.ce-pro.com.

CEDIA has their member survey from 2004 on their site, I think some good comparative info there.
Your questions a bit in a vacuum -- #'s different for retailer, hybrid, installer.
And there are relative issues, eg, the higher your GM, the fewer turns req'd to achieve a decent GMROI.
That said, always a good thing if current assets > current liabilities; if cash+receivables-deposits > payables; gm>= 35% (not incl labor), turns >= 6. I always like to know who's money I'm working on: inventory - AP merch, cash - cust deposits.
query [email protected] more specifics

Great advice Steve...

The SCORE guys are a great resource as well.
They are the retired execs that dole out free advice to small business owners and startups.

As for inventory turns, do any of you full custom guys even calculate it?? If you do, how to you gauge a "better" or "worse" period from another??

Nearly every dollar of inventory that hits the door is paid for by a client deposit, so I guess I don't mind how my turns look if I am not carrying the inventory.

Gross sales, sales margin, labor margin, and cashflow are my main concerns.

Rick, it's good to see you separating merch sales from labor sales so you can quantify margins for each. This is one of the first steps to getting financials right.

Cashflow, tho, there's the real bear. Try comparing these numbers:

AR divided by average daily sales = "AR days" (how many days of sales are uncollected. Make sure AR is net of any customer deposits)

Customer deposits divided by avergae daily sales = "Depo days" (how many days of sales you have collected in advance)

AR days is your money, Depo days is OPM (other people's money).

As for inventory, instead of turns, try "days" = inventory divided by average daily sales at cost. You can do the same thing with AP, to see how many days of sales it takes to pay your bills.

Taking these big numbers down to days helps you "predict" future balances, based on your sales forecast. Valuable stuff if you're trying to plan, as opposed to react.

Very nice.

Hey, dolfan -- did you get the answers you were looking for?