For Daily News Updates
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
Asset turnover
0.5%
3.3 times
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