KEY FINANCIAL MANAGEMENT TOOLS PRESENTED AT MASTER BUILDERS’ FIRST ANNUAL REGIONAL ECONOMIC OUTLOOK & MANAGEMENT FORUM BY ALLEN & ASSOCIATES

KEY TOOL AREAS FINANCIAL OPERATIONS SALES MANAGEMENT

TOOLS COVERED TODAY BALANCE SHEET P&L BENCHMARKING BREAKEVEN ANALYSIS JOB & PRODUCT COSTING/PRICING JOB & CUSTOMER CONTRIBUTION

THE TWO KEY FINANCIAL TOOLS BALANCE SHEET PROFIT & LOSS STATEMENT

BALANCE SHEET SNAP SHOT OF THE COMPANY’S FINANCIAL HEALTH CURRENT PERIOD LAST YEAR VARIANCE WORKING CAPITAL RATIOS DSOs

TYPICAL BALANCE SHEET OTHER SSETS

TYPICAL BALANCE SHEET CURRENT LIABILITIES

TYPICAL BALANCE SHEET LONG TERM LIABILITIES

TYPICAL BALANCE SHEET EQUITY

TYPICAL BALANCE SHEET RATIOS

PROFIT & LOSS STATEMENT MOTION PICTURE OF A COMPANY’S SALES, COSTS & EARNINGS OVER A PERIOD OF TIME: VARIABLE AND FIXED COST CATERGORIES DOLLARS PER CENT TO SALES COST PER UNIT VARIANCE FROM PLAN

COSTS VARIABLE COSTS DEFINED AS: TYPES: MATERIAL PLANT DELIVERY COST INCURRED WHEN A SALE IS MADE TYPES: MATERIAL PLANT DELIVERY

COSTS FIXED COSTS DEFINED AS: COSTS FIXED IN RELATION TO TIME TYPES: DIRECT SALES G&A

VARIABLE & FIXED COSTS

EDITDA EBITDA = $2,952 $5.90 10.7%

BENCHMARKING ASSISTS IN HELPING TO ANALYZE THE COST OF DOING BUSINESS ASSISTS IN HELPING TO ANALYZE THE EFFICIENCY OF AN OPERATION

Cement Prices vs Ready Mix Prices 1st Quarter of 1980 to 2nd Quarter of 1996

MODULE III: SESSION 1 - 0H

MODULE III: SESSION 1 - 0H

FINACIAL RATIOS <1M 1M-3M 3M-5M >5M CURRENT 1.8 2.0 1.6 1.7 CASH 29.9 40.5 13.1 16.9 D/E 1.1 0.6 1.1 0.4 AR DSO 32.9 46.2 54.7 46.3 INVENT 10.8 11.9 10.8 10.2

BREAK-EVEN POINT BE PT = FIXED COST DIVIDED BY MARGIN DATA REQUIRED CURRENT TOTAL FIXED COSTS = $1,000,000 CURRENT AVG SELLING PRICE = $60.00/YD CURRENT AVG VARIABLE CST = $40.00/YD CURRENT MARGIN = $20.00/YD BE PT IN YDS = FC/UNIT MARGIN BE PT IN $ = FC/MARGIN RATIO $1,000,000/$20 = 50,000 YDS $1,000,000/.33 = $3,030,303

ADDITIONAL SALES REQUIRED TO COVER INCREASED FIXED COSTS CURRENT SP = $60/YD CURRENT VC = $40.00/YD CURRENT FC = $1,000,000 CURRENT BE PT = 50,000 YDS NEW FC = $1,500,000 MARGIN = $20 NEW BE PT = 75,000 YDS ($1,500,000/$20) INCREASE OF 25,000 YDS/50%

VOLUME REQUIRED TO MAINTAIN CURRENT PROFIT LEVEL IF PRICES ARE INCREASED NEW SP = $65.00 % INCREASE = 8.33% NEW MARGIN = $25.00 NEW BE PT = 40,000 YDS ($1,000,000/$25) % DECREASE = 20% MODULE III: SESSION 2 OH

VOLUME REQUIRED TO MAINTAIN CURRENT PROFIT LEVEL IF PRICES ARE DECREASED NEW SP = $50.00/YD % DECREASE = 16.6% NEW MARGIN = $10.00 NEW BE PT = 100,000 YDS ($1,000,000/$10) % INCREASE = 100% MODULE III: SESSION 2 OH

KEY OPERATIONAL TOOLS PAYROLL ANAYLSIS NUMBER OF EMPLOYES BY CATEGORY OVERTIME FRINGES

KEY OPERATIONAL TOOLS PRODUCTION YDS PER YR PER PLANT YDS PER YR PER TRUCK AVG DAILY LOADS PER TRUCK AVG YDS PER LOAD AVG YDS PER MAN HOUR VARIABLE DELIVERY COST PER MINUTE

SALES TOOLS DAILY/M-T-D/Y-T-D $ SALES & YARDS BY PLANT JOBS AVAILABLE JOBS BID YDS/PRICE/COMPETITION JOBS SOLD YDS/PRICE COMPETITION BACKLOG YDS/WEIGHTED AVERAGE PRICE

SALES TOOLS JOB COSTING TARGET MARGIN PRICING PRICE LISTS

C0ST COMPARISON SHEET

JOB 1 MARKET PRICE = $60.00 VARIABLE COST = $59.70 MARGIN = $00.30 JOB CONTRIBUTION = $3,000 PRE-TAX PROFIT = ? AFTER TAX PROFIT = ?

JOB 2 MARKET PRICE = $60.00 VARIABLE COSTS = $41.57 MARGIN = $18.43 JOB CONTRIBUTION = $184,300 PRE-TAX PROFIT = $8.43 AFTER TAX PROFIT = $5.05

JOB 1 MARKET PRICE = $55.00 VARIABLE COST = $59.70 MARGIN = ($4.70) JOB CONTRIBUTION = ($47,000)

JOB 2 MARKET PRICE = $55.00 VARIABLE COSTS = $41.57 MARGIN = $13.43 JOB CONTRIBUTION = $134,300 PRE-TAX PROFIT = $3.43 AFTER-TAX PROFIT = $2.05

JOB 2 MARKET PRICE = $50.00 VARIABLE COST = $41.57 MARGIN = $8.43 JOB CONTRIBUTION = $84,300 PRE-TAX PROFIT = ?

SALES & MANAGEMENT TOOLS DAILY & J-T-D JOB INFORMATION YARDS VARIABLE DELIVERY COST PER YD UNIT MARGIN PER YARD $ CONTRIBUTION VARIANCE FROM BID DATA JOB SUMMARY

OTHER MANAGEMENT TOOLS BUDGETS CASH FORECASTS 3-5 YEAR PLAN MODELS

SUMMARY ONLY THE INTELLIGENT WILL SURVIVE ONLY THE INFORMED WILL BE INTELLIGENT MANAGEMENT MUST BE ABLE TO IDENTIFY AND QUANTIFY ALL PROBLEMS IF IT IS GOING TO SOLVE THEM MANAGEMENT MUST USE ALL TOOLS AND TECHNOLOGY AVAILABLE TO MANAGE