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Re: Ratios

By: DigSpace in ALEA | Recommend this post (0)
Thu, 03 May 12 7:08 PM | 60 view(s)
Boardmark this board | The Trust Matrix 		Msg. 07529 of 54959
(This msg. is a reply to 07527 by Cactus Flower)
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It is precisely that metric that is absent from Wave reporting and absent from the CCs, companies report these things, particularly small growing companies. Its what people want to know. You lost me on how using COS would help me get there as far as dropping out a meaningful number. That a number "Sales General and Administrative" has next to it a number "Cost of Sales" seems like double counting as I thought the word sales was used in the prior column. Coming from a land of fish and birds and lacking any education these matters I am disinclined to divert the abacus to playing with values that I do not have some sort of intuitive spatial feel for. I always though cost of sales was the cost of the shrink wrap, and that SGA was sales team salaries etc. I can't see value in measuring shrink warp, and I don't know what component of admin is sales related versus e.g. RD related or financing activities related.


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The above is a reply to the following message:
Re: Ratios
By: Cactus Flower in ALEA
Thu, 03 May 12 7:01 PM 		Msg. 07527 of 54959

Hi dig,

To get something close to a sales ratio, you would want to remove R&D, at least. If the auditor did its job, the classification between R&D and S,G&A should be pretty accurate and should at least be consistent.

The good news, as Ramsey is pointing out, is that the tide of small sales is improving.

The bad news, as nfp is pointing out, is that each sale costs more as the sales team expands.

Going forward, the figure to watch is the ratio of sales (on some sensible, comparable measure) to sales-related expenses. Can Wave's sales team improve the income per sales person? If it can, then the market is expanding and I'd expect the company to do well. If it does not, then Wave's in serious trouble.

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