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NAMA operating ratio report: rising
costs hurt pre-tax proﬁts in 2008
F inancial performance varied widely among vend-
ing operators in 2008, according to the National
Automatic Merchandising Association (NAMA)
operating ratio report, but higher operating costs impact-
ed proﬁtability for most operators. The typical ﬁrm had
STRATEGIC PROFIT MODEL RATIOS, FIRMS WITH ANNUAL SALES
OVER $2 MILLION IN 2008
Pre-tax proﬁ t margin
sales of $6,357,285 and a pre-tax proﬁt of 0.5 percent.
Pre-tax return on assets 1.6%
High-proﬁt ﬁrms had sales of $8,133,398 and pre-tax
proﬁt of 5.2 percent. Of greatest consequence, the typi- Financial leverage 1.7 times
cal ﬁrm had a pre-tax return on assets (proﬁt before taxes
Pre-tax return of net worth 2.7%
expressed as a percentage of total assets) of 1.6 percent.
The NAMA report, based on 111 participating ﬁrms,
found proﬁtability was particularly challenged for ﬁrms under $2 million, the typical ROA was 18.4 percent in
with more than $2 million in sales. The NAMA survey 2008 and 12.4 percent in 2007.
found operating proﬁt fell to 0.7 percent for ﬁrms with NAMA has noted that 5.0 percent ROA is viewed as a
more than $2 million in sales, compared to 1.7 percent in minimum acceptable level of return on assets.
2007. For ﬁrms with under $2 million in sales, operating The relationship between sales size and proﬁtability
proﬁt was 4.5 percent for both years. for large ﬁrms was pronounced, the report noted. Firms
Return on assets (ROA), which ﬁnancial analysts view with sales over $20 million had an ROA that was ﬁve
as a critical measure of proﬁtability, fell to 1.6 percent times that of the ﬁrms with sales under $5 million.
for ﬁrms with more than $2 million in sales in 2008, For information a