Report differentiates distributor profits

The recently released 2003 National Truck Equipment Association (NTEA) Distributor Profit Survey Report indicates major differences between performances of typical and high-profit truck equipment distribution firms.

Of them all, the difference in return on assets (ROA) is most striking. Said Dr Albert Bates, president of the research firm Profit Planning Group (PPG), Boulder CO, “As a measurement of the economic viability of a firm, ROA is the single most valuable measure of a company's overall performance. Companies that cannot produce an adequate ROA face an extremely difficult future.”

The typical participating firm had an ROA of 1.7% based on 2002 fiscal year data. This means every dollar invested in the firm produced a pre-tax profit of $0.017. In sharp contrast, high-profit participants produced an ROA of 15.5%. Every dollar of asset investment produced a return of $0.155 cents in profit before taxes. For a company with $4,017,249 in sales, the difference is a profit of $24,103 for the typical firm versus $188,811 for the high-profit firm.

The report provides data that truck equipment distribution firms can use to benchmark their profitability. Components include an explanation of statistics and executive summary containing an overview of the study with emphasis between the typical and high-profit truck equipment distributor firm.

To order a copy of the report, e-mail [email protected], visit www.ntea.com (click on “Products and Services”), or phone 800-441-NTEA. The report retails at $100 for NTEA members, $200 for non-members.

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