Survey Participants1 Results – General Comparatives – All Generals5 Generals By Size17 Under $10 Million Revenue18 $10 to $25 Million Revenue30 Over $25 Million Revenue42 Results – Subs Comparative Subs – All Trades55 Subs – By Trade67 Electrical Contractors68 Steel Fabricators/Erectors80 Underground Contractors92 Mechanical and HVAC Contractors104 Concrete Contractors116 Subs – By Size128 Under $2 Million Revenue129 $2 to $10 Million Revenue139 $10 to $25 Million Revenue151 Over $25 Million Revenue163 Acknowledgements175 VonLehman & Company Inc Annual Survey of Greater Cincinnati Contractors Table of Contents

1 Survey Participants

2 Type of Contractor Union vs. Non-Union

3

4 Results - Generals

Comparative – All Generals

6 Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements. Net Earnings to Revenue Generals (by Size)

7 Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well. Gross Profit Generals (by Size)

8 Operating Expenses to Revenue Generals (by Size) Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

9 Operating Income to Revenue Generals (by Size) Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

10 Current Ratio Generals (by Size) Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

11 Age of Accounts Receivable in Days Generals (by Size) Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

12 Retainage to Total Accounts Receivable Generals (by Size) Computation:A/R retainage divided by total accounts receivable A/R Retainage Total Accounts Receivable Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.

13 Cash as a % of Total Assets Generals (by Size) Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

14 Cost in Excess/Billings in Excess Generals (by Size) Computation:Cost in excess divided by billings in excess Cost in Excess Billings in Excess Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.

15 Debt to Equity Generals (by Size) Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

16 Average Months in Backlog Generals (by Size) Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

17 Generals By Size

18 Under $10 Million Revenue

19 Net Earnings to Revenue Under $10M Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.

20 Gross Profit Under $10M Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.

21 Operating Expenses to Revenue Under $10M Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

22 Operating Income to Revenue Under $10M Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

23 Current Ratio Under $10M Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

24 Age of Accounts Receivable in Days Under $10M Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

25 Retainage to Total Accounts Receivable Under $10M Computation:A/R retainage divided by total accounts receivable A/R Retainage Total Accounts Receivable Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.

26 Cash as a % of Total Assets Under $10M Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

27 Cost in Excess/Billings in Excess Under $10M Computation:Cost in excess divided by billings in excess Cost in Excess Billings in Excess Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.

28 Debt to Equity Under $10M Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

29 Average Months in Backlog Under $10M Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

30 $10 to $25 Million Revenue

31 Net Earnings to Revenue $10 to $25M Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.

32 Gross Profit $10 to $25M Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.

33 Operating Expenses to Revenue $10 to $25M Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

34 Operating Income to Revenue $10 to $25M Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

35 Current Ratio $10 to $25M Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

36 Age of Accounts Receivable in Days $10 to $25M Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

37 Retainage to Total Accounts Receivable $10 to $25M Computation:A/R retainage divided by total accounts receivable A/R Retainage Total Accounts Receivable Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.

38 Cash as a % of Total Assets $10 to $25M Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

39 Cost in Excess/Billings in Excess $10 to $25M Computation:Cost in excess divided by billings in excess Cost in Excess Billings in Excess Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.

40 Debt to Equity $10 to $25M Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

41 Average Months in Backlog $10 to $25M Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

42 Over $25 Million Revenue

43 Net Earnings to Revenue Over $25M Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.

44 Gross Profit Over $25M Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.

45 Operating Expenses to Revenue Over $25M Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

46 Operating Income to Revenue Over $25M Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

47 Current Ratio Over $25M Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

48 Age of Accounts Receivable in Days Over $25M Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

49 Retainage to Total Accounts Receivable Over $25M Computation:A/R retainage divided by total accounts receivable A/R Retainage Total Accounts Receivable Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.

50 Cash as a % of Total Assets Over $25M Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

51 Cost in Excess/Billings in Excess Over $25M Computation:Cost in excess divided by billings in excess Cost in Excess Billings in Excess Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.

52 Debt to Equity Over $25M Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

53 Average Months in Backlog Over $25M Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

54 Results – Subs

Comparative – Subs – All Trades

56 Net Earnings to Revenue Subs (by Trade) Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.

57 Gross Profit Subs (By Trade) Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.

58 Operating Expenses to Revenue Subs (By Trade) Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

59 Operating Income to Revenue Subs (By Trade) Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

60 Current Ratio Subs (By Trade) Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

61 Age of Accounts Receivable in Days Subs (By Trade) Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

62 Retainage to Total Accounts Receivable Subs (By Trade) Computation:A/R retainage divided by total accounts receivable A/R Retainage Total Accounts Receivable Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.

63 Cash as a % of Total Assets Subs (By Trade) Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

64 Cost in Excess/Billings in Excess Subs (By Trade) Computation:Cost in excess divided by billings in excess Cost in Excess Billings in Excess Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.

65 Debt to Equity Subs (By Trade) Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

66 Average Months in Backlog Subs (By Trade) Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

67 Subs – By Trade

68 Electrical Contractors

69 Net Earnings to Revenue Electrical Contractors Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.

70 Gross Profit Electrical Contractors Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.

71 Operating Expenses to Revenue Electrical Contractors Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

72 Operating Income to Revenue Electrical Contractors Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

73 Current Ratio Electrical Contractors Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

74 Age of Accounts Receivable in Days Electrical Contractors Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

75 Retainage to Total Accounts Receivable Electrical Contractors Computation:A/R retainage divided by total accounts receivable A/R Retainage Total Accounts Receivable Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.

76 Cash as a % of Total Assets Electrical Contractors Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

77 Cost in Excess/Billings in Excess Electrical Contractors Computation:Cost in excess divided by billings in excess Cost in Excess Billings in Excess Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.

78 Debt to Equity Electrical Contractors Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

79 Average Months in Backlog Electrical Contractors Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

80 Steel Fabricators/ Erectors

81 Net Earnings to Revenue Steel Fabricators/Erectors Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.

82 Gross Profit Steel Fabricators/Erectors Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.

83 Operating Expenses to Revenue Steel Fabricators/Erectors Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

84 Operating Income to Revenue Steel Fabricators/Erectors Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

85 Current Ratio Steel Fabricators/Erectors Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

86 Age of Accounts Receivable in Days Steel Fabricators/Erectors Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

87 Retainage to Total Accounts Receivable Steel Fabricators/Erectors Computation:A/R retainage divided by total accounts receivable A/R Retainage Total Accounts Receivable Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.

88 Cash as a % of Total Assets Steel Fabricators/Erectors Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

89 Cost in Excess/Billings in Excess Steel Fabricators/Erectors Computation:Cost in excess divided by billings in excess Cost in Excess Billings in Excess Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.

90 Debt to Equity Steel Fabricators/Erectors Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

91 Average Months in Backlog Steel Fabricators/Erectors Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

92 Underground Contractors

93 Net Earnings to Revenue Underground Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.

94 Gross Profit Underground Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.

95 Operating Expenses to Revenue Underground Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

96 Operating Income to Revenue Underground Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

97 Current Ratio Underground Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

98 Age of Accounts Receivable in Days Underground Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

99 Retainage to Total Accounts Receivable Underground Computation:A/R retainage divided by total accounts receivable A/R Retainage Total Accounts Receivable Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.

100 Cash as a % of Total Assets Underground Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

101 Cost in Excess/Billings in Excess Underground Computation:Cost in excess divided by billings in excess Cost in Excess Billings in Excess Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.

102 Debt to Equity Underground Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

103 Average Months in Backlog Underground Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

104 Mechanical and HVAC Contractors

105 Net Earnings to Revenue Mechanical and HVAC Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.

106 Gross Profit Mechanical and HVAC Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.

107 Operating Expenses to Revenue Mechanical and HVAC Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

108 Operating Income to Revenue Mechanical and HVAC Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

109 Current Ratio Mechanical and HVAC Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

110 Age of Accounts Receivable in Days Mechanical and HVAC Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

111 Retainage to Total Accounts Receivable Mechanical and HVAC Computation:A/R retainage divided by total accounts receivable A/R Retainage Total Accounts Receivable Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.

112 Cash as a % of Total Assets Mechanical and HVAC Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

113 Cost in Excess/Billings in Excess Mechanical and HVAC Computation:Cost in excess divided by billings in excess Cost in Excess Billings in Excess Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.

114 Debt to Equity Mechanical and HVAC Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

115 Average Months in Backlog Mechanical and HVAC Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

116 Concrete Contractors

117 Net Earnings to Revenue Concrete Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.

118 Gross Profit Concrete Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.

119 Operating Expenses to Revenue Concrete Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

120 Operating Income to Revenue Concrete Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

121 Current Ratio Concrete Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

122 Age of Accounts Receivable in Days Concrete Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

123 Retainage to Total Accounts Receivable Concrete Computation:A/R retainage divided by total accounts receivable A/R Retainage Total Accounts Receivable Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.

124 Cash as a % of Total Assets Concrete Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

125 Cost in Excess/Billings in Excess Concrete Computation:Cost in excess divided by billings in excess Cost in Excess Billings in Excess Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.

126 Debt to Equity Concrete Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

127 Average Months in Backlog Concrete Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

128 Subs – By Size

129 Under $2 Million Revenue

130 Net Earnings to Revenue Under $2M Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.

131 Gross Profit Under $2M Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.

132 Operating Expenses to Revenue Under $2M Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

133 Operating Income to Revenue Under $2M Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

134 Current Ratio Under $2M Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

135 Age of Accounts Receivable in Days Under $2M Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

136 Cash as a % of Total Assets Under $2M Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

137 Debt to Equity Under $2M Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

138 Average Months in Backlog Under $2M Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

139 $2 to $10 Million Revenue

140 Net Earnings to Revenue $2 to $10M Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.

141 Gross Profit $2 to $10M Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.

142 Operating Expenses to Revenue $2 to $10M Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

143 Operating Income to Revenue $2 to $10M Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

144 Current Ratio $2 to $10M Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

145 Age of Accounts Receivable in Days $2 to $10M Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

146 Retainage to Total Accounts Receivable $2 to $10M Computation:A/R retainage divided by total accounts receivable A/R Retainage Total Accounts Receivable Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.

147 Cash as a % of Total Assets $2 to $10M Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

148 Cost in Excess/Billings in Excess $2 to $10M Computation:Cost in excess divided by billings in excess Cost in Excess Billings in Excess Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.

149 Debt to Equity $2 to $10M Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

150 Average Months in Backlog $2 to $10M Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

151 $10 to $25 Million Revenue

152 Net Earnings to Revenue $10 to $25M Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.

153 Gross Profit $10 to $25M Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.

154 Operating Expenses to Revenue $10 to $25M Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

155 Operating Income to Revenue $10 to $25M Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

156 Current Ratio $10 to $25M Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

157 Age of Accounts Receivable in Days $10 to $25M Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

158 Retainage to Total Accounts Receivable $10 to $25M Computation:A/R retainage divided by total accounts receivable A/R Retainage Total Accounts Receivable Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.

159 Cash as a % of Total Assets $10 to $25M Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

160 Cost in Excess/Billings in Excess $10 to $25M Computation:Cost in excess divided by billings in excess Cost in Excess Billings in Excess Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.

161 Debt to Equity $10 to $25M Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

162 Average Months in Backlog $10 to $25M Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

163 Over $25 Million Revenue

164 Net Earnings to Revenue Over $25M Computation:This ratio is computed by dividing earnings before taxes by revenue Net Earnings Revenue Interpretation:This ratio shows a company’s net income before tax, and is typically one of the most relied upon measures of a company’s profitability by users of the company’s financial statements.

165 Gross Profit Over $25M Computation:This ratio is computed by dividing gross profit by revenue Gross Profit Revenue Interpretation:This ratio shows the profit generated by jobs, including reductions for not only direct job costs, but indirect job costs as well.

166 Operating Expenses to Revenue Over $25M Computation:Operating (selling and administrative) expenses divided by revenue Operating Expenses Revenue Interpretation:This graph depicts operating (selling and administrative) expenses as a percentage of net sales. One benchmark for healthy contractors puts the ratio at 6%.

167 Operating Income to Revenue Over $25M Computation:Operating income divided by revenue Operating Income Revenue Interpretation:This graph depicts operating income as a percentage of net sales. A contractor becomes healthier as this ratio becomes higher.

168 Current Ratio Over $25M Computation:Total current assets divided by total current liabilities Current Assets Current Liabilities Interpretation:This ratio is a rough indication of the company’s ability to service its current obligations. Generally, the higher the current ratio, the greater a company’s ability to pay its current obligations. However, the composition and quality of current assets is a critical factor in the analysis of an individual company’s liquidity.

169 Age of Accounts Receivable in Days Over $25M Computation:Accounts receivable divided by sales, multiplied 365 days Accounts Receivable x 365 Sales Interpretation:This figure expresses the average time in days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies in accounts receivable. A comparison of a company's daily receivables may indicate the extent of a company's control over credit and collections. The terms offered by a company to its customers, however, may differ from terms within the industry and should be taken into consideration.

170 Retainage to Total Accounts Receivable Over $25M Computation:A/R retainage divided by total accounts receivable A/R Retainage Total Accounts Receivable Interpretation:This ratio depicts the amount of receivables retained by owners on work performed in hard dollar contracts, compared to total accounts receivable.

171 Cash as a % of Total Assets Over $25M Computation:Cash divided by total assets Cash Total Assets Interpretation:This ratio shows how much cash the company keeps on hand, as compared to its total assets.

172 Cost in Excess/Billings in Excess Over $25M Computation:Cost in excess divided by billings in excess Cost in Excess Billings in Excess Interpretation:This ratio measures the extent to which the company is able to progress bill its open jobs. The lower the ratio, the more quickly the company has been able to bill its customers as work progresses, and the sooner it should be able to collect its receivables.

173 Debt to Equity Over $25M Computation:Total liabilities divided by total net worth Total Liabilities Total Net Worth Interpretation:This ratio expresses the relationship between capital contributed by creditors to that contributed by owners. It also expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. A lower ratio generally indicates greater long-term financial safety. A common, rule-of-thumb standard for this ratio of 3 to 1 or better is often considered acceptable.

174 Average Months in Backlog Over $25M Computation:Twelve months per year times backlog divided by revenue Backlog x 12 Revenue Interpretation:This ratio measures the number of months of work that a company has in backlog, based upon its most recent sales experience. Normally, the higher the figure the better, as long as the contractor has adequate resources (working capital and equity) to handle the increased backlog.

175 The participants for the survey were selected from several databases listing contractors located in the Greater Cincinnati area. Financial information of 99 contractors is included, 28 of which are general contractors, and 71 that are subcontractors. The percentages depicted in all of these graphs are dependent upon how well the specific respondents in each size range or trade type did for the year, and may vary if another survey were performed, depending on the respondents to that survey. All Cincinnati averages shown in the survey are based on the weighted average as determined by the number of respondents in each category. Each category was deemed to have a population large enough to preserve of anonymity of all respondents involved. ACKNOWLEDGEMENTS

176 ACKNOWLEDGEMENTS In some instances, respondents that were deemed to be outliers were eliminated from the graphical presentation so as to protect the integrity of the data presented. In addition, the results of the survey were compared to the results of the Construction Financial Management Association’s (CFMA) 2008 Construction Industry Annual Financial Survey for the Midwest Region, specific industries and size, as well as the overall best in class. ©2008 by the CONSTRUCTION FINANCIAL MANAGEMENT ASSOCIATION. All rights reserved. Reprinted with the permission of CFMA.