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

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KEY TOOL AREAS l FINANCIAL l OPERATIONS l SALES l MANAGEMENT

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

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THE TWO KEY FINANCIAL TOOLS l BALANCE SHEET l PROFIT & LOSS STATEMENT

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l SNAP SHOT OF THE COMPANYS FINANCIAL HEALTH CURRENT PERIOD LAST YEAR VARIANCE WORKING CAPITAL RATIOS DSOs BALANCE SHEET

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TYPICAL BALANCE SHEET OTHER SSETS

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TYPICAL BALANCE SHEET CURRENT LIABILITIES

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TYPICAL BALANCE SHEET LONG TERM LIABILITIES

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TYPICAL BALANCE SHEET EQUITY

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TYPICAL BALANCE SHEET RATIOS

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

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

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

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VARIABLE & FIXED COSTS

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EDITDA l EBITDA =$2,952$5.9010.7%

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

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

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MODULE III: SESSION 1 - 0H39

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MODULE III: SESSION 1 - 0H40

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FINACIAL RATIOS 5M CURRENT1.82.01.61.7 CASH29.940.513.116.9 D/E1.10.61.10.4 AR DSO32.946.254.746.3 INVENT10.811.910.810.2

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

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

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MODULE III: SESSION 2 OH64 VOLUME REQUIRED TO MAINTAIN CURRENT PROFIT LEVEL IF PRICES ARE INCREASED l NEW SP=$65.00 l % INCREASE=8.33% l NEW MARGIN=$25.00 l NEW BE PT=40,000 YDS ($1,000,000/$25) l % DECREASE=20%

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MODULE III: SESSION 2 OH65 VOLUME REQUIRED TO MAINTAIN CURRENT PROFIT LEVEL IF PRICES ARE DECREASED l NEW SP=$50.00/YD l % DECREASE=16.6% l NEW MARGIN=$10.00 l NEW BE PT=100,000 YDS ($1,000,000/$10) l % INCREASE =100%

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

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

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

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

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

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KEY OPERATIONAL TOOLS l 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

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

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l JOB COSTING l TARGET MARGIN PRICING l PRICE LISTS SALES TOOLS

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MODULE III: SESSION 1 - 0H81

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MODULE III: SESSION 1 - 0H82

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C0ST COMPARISON SHEET

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

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

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

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

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

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

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

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