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Net Profit After Interest % (N.P.A.I.)

Net Profit After Interest ÷ Company Turnover (x100)

Baseline: > 2%

Description:

This is the KPI that many franchise manufacturers refer to when discussing levels of profitability within their dealer networks and it is often referred to as the company's bottom line.

Many business owners consider this to be one of the figures that holds the most importance, as it provides you with the profit you have retained as a percentage of the products and services that you have sold.

It is important to keep an eye on the trend of this KPI because a diminishing trend could indicate that you are working harder for a lower return, a condition otherwise known as busy fool syndrome.

Example:

A) N.P.A.I = R363,091
B) Company Turnover = R14,523,661
C) N.P.A.I % = 2.5% (A ÷ B X 100)

Discussion:

This KPI is also referred to as Net Profit Before Tax on some financial reports as the only other item to be deducted from this figure is taxation.

This statistic is obviously influenced by Net Profit Before Interest and of course the level of interest that you are paying.

Related Terminology:

Net Profit Before Interest % (N.P.B.I.)

N.P.B.I. ÷ Turnover (x100)

Baseline: > 3%

Description:

This is probably one of the most important profit indicators for a business to measure. It provides you with the dealership result as opposed to an individual departmental result.

This N.P.B.I % statistic gives you the capability to measure the ability of the company to retain profit from the products and services that it is selling, without taking the cost of capital into account.

This means that you can accurately compare two companies, on a like-for-like basis, without the interference of their financial stability or borrowings. This is critical when you are using Composite comparison.

Example:

A) N.P.B.I. = R508,327
B) Company Turnover = R14,523,661
C) N.P.B.I. % = 3.5% (A ÷ B X 100)

Discussion:

Without doubt, this KPI is the best measurement when comparing the profitability between companies. It simply states how much of your turnover has been retained as profit. (Before Interest)

Related Terminology:

Net Profit Before Tax % (N.P.B.T.)

Net Profit Before Tax ÷ Company Turnover (x100)

Baseline: > 2%

Description:

This is the KPI that many franchise manufacturers refer to when discussing levels of profitability within their dealer networks and it is often referred to as the company's bottom line. It is also known as Net Profit After Interest or Return on Sales.

Many business owners consider this to be one of the figures that holds the most importance, as it provides you with the profit you have retained as a percentage of the products and services that you have sold.

It is important to keep an eye on the trend of this KPI because a diminishing trend could indicate that you are working harder for a lower return, a condition otherwise known as busy fool syndrome.

Example:

A) N.P.B.T = R363,091
B) Company Turnover = R14,523,661
C) N.P.B.T. %  = 2.5% (A ÷ B X 100)

Discussion:

There are no KPI measurements for profitability after taxation has been deducted, as the parameters and individual situations for taxation are different for every business.

Related Terminology:

(See also Net Profit Before Interest %)

New: Used Retail Ratio

New Retail Units Sold ÷ Used Retail Units Sold

Benchmark: <1:1

Description:

This KPI Is specifically for retail vehicles and excludes all fleet sales. The statistic establishes the relationship between the number of new vehicles that you retail and the number of used vehicles that you retail.

The example below shows that for every used vehicle that you retail, you sell 0.57 new retail vehicles. take the time to understand what you are reading on your reports as some manufacturers calculate this ratio in reverse. (Used: New)

Example:

A) New Retail Sales = 548
B) Used Retail Sales = 960
C) New: Used Retail Ratio = 0.57:1 (A ÷ B)

Discussion:

It is not possible to provide an industry benchmark for this performance as it is influenced by the franchise that you operate, your overall trading strategy, the ability of the Sales Manager and the sales team.

Related Terminology: