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Idle Time (Bodyshop)

Hours Attended x Hours Worked

Guideline: See Utilisation

Description:

Idle Time does not mean that the Productives are standing around idle; it simply represents the time spent at the dealership that cannot be charged out to the customer.

Typically this could be time spent locating keys or vehicles, waiting for parts and other such issues.

The mathematical formula is simply Hours Attended minus Hours Worked and this is always shown as a monetary value, which can usually be found within the Variable Expenses of the Bodyshop.

Example:

A) Hours Attended = 320
B) Hours Worked = 304
C) Hours Idle = 16 (A - B)
D) Prime labour Cost = R10
E) Idle Time = R160 (C X D)

Discussion:

In addition to this, some financial reports might show the monetary value of Idle Time as a percentage of the Departmental Gross Profit.

Related Terminology:

Idle Time (Service Department)

Hours Attended x Hours Worked

Guideline: See Utilisation

Description:

Idle Time does not mean that the Technicians are standing around idle doing nothing; it simply represents the time spent at the dealership that cannot be charged out to the customer.

Typically this could be time spent locating keys or vehicles, waiting for parts and other such issues.

The mathematical formula is simply Hours Attended minus Hours Worked and this is always shown as a monetary value, which can usually be found within the Variable Expenses of the Service Department.

Example:

A) Hours Attended = 320
B) Hours Worked = 304
C) Hours Idle = 16 (A - B)
D) Prime labour Cost = R8,40
E) Idle Time = R136 (C X D)

Discussion:

In addition to this, some financial reports might show the monetary value of Idle Time as a percentage of the Departmental Gross Profit.

Related Terminology:

(Also see Hours Attended and Hours Worked)

Interest %

Total Interest ÷ Total Turnover (x100)

Benchmark: < 1%

Description:

This KPI assesses the level of interest that you are paying and expresses it as a percentage against your company turnover.

The amount of interest that a company is paying on its borrowings is always of primary concern, especially when interest rates are increasing. However, nearly all businesses borrow money at some time so the question must be how much interest is your company paying and is it too much?

It is generally accepted that the level of interest that you are paying should be less than 1% of your company turnover.

Example:

A) Annual Interest payments = R101,665
B) Company Turnover = R14,523,661
C) Interest % = 0.7% (A ÷ B X 100)

Discussion:

If this KPI is higher in your business then you may wish to arrange a meeting with your Bank manager or your other providers of money to renegotiate your terms.

Related Terminology:

(Also see interest cover)

Interest Cover

Total Interest ÷ Cash Profit (x100)

Benchmark: < 33%

Description:

This KPI establishes your total interest payments against the value of your Cash Profits.

When you approach your bank manager to borrow money, their concern is whether or not you can afford to pay the interest on your loan, as they usually have your buildings as security against the principal loan value. This is how they assess your business in this area.

Example:

A) Annual Interest Payments = R90,697
B) Cash Profits = R412,263
C) Interest Cover = 22% (A ÷ B X 100)

Discussion:

In many cases, your Bank Manager will calculate this figure and if it is less than the guideline of 33% they may ask you if you are borrowing enough money.

Ironically, they do not assess your business's ability to repay the whole of the loan repayment and therefore it is critical that you also calculate the Loan Repayment % for yourself.

Related Terminology:

(See also Interest %)

Investment

Net Worth + Interest-Bearing Borrowings

Guideline: See Circulation of Funds Employed

Description:

This term refers to all of the money that is invested in the company (or nearly all of it).

The total investment is all of the funds that are employed within the company to enable it to operate on a day-to-day basis.

Its constituent parts are Net Worth (the owners funds) and all interest-bearing borrowings. Items such as Creditors, Accruals and the like are excl;uded from this figure, as they do not attract interest payments.

The value of investment informs you of how much money is invested into the company to enable it to function on a daily basis and although by itself it is not a KPI it is used in the calculation of many other KPI's.

Example:

Discussion:

Investment is always shown as a monetary value and is usually shown on the summary page of your financial information. If the value of your Funds Employed is not shown on your summary page you can calculate it for yourself from the balance sheet.

Please keep in mind that the value of the Investment is not the same value as the Total Liabilities.

Related Terminology:

Funds employed is sometimes called Funds Employed or Capital Employed.