10 Checklist Items for Dealers

Cash. As we've learned firsthand recently, cash management and cash flow have never been more critical concerns than today.

Morningstar Report says if net income is much larger than cash flow from operations, it's a sign the earnings quality is questionable. But if cash flow from operations exceeds net income, the firm may be much healthier that its net income suggests.

Bottom line: Each month, have your controller prepare a cash flow statement, and review each line entry to ensure you are making the best use of and maximizing your cash.

Total Personnel Expenses. Both as a percentage of departmental gross and total gross. Obviously, the key reference here is your gross production.

Total Dealership Advertising (net). As a percentage of total dealership gross as well as individual departmental expenditures as a percentage of their gross.

Floor Plan Expenses. Net departmental interest expenditure(s) as a percentage of their total gross.

Dealership Net Profit. Both actual dollars as well as the net profit (pre-tax) percentage.

Individual Department's Total Gross Profit.

Individual Department's Retained Income. A.C.E. (After controllable expense is defined as selling expenses and total personnel expenses including benefits.)

Total Departmental Expense. As a percentage of each individual department's gross.

Personnel Productivity. Total dealership gross divided by the total personnel count and also each department's gross divided by the actual departmental employee count including fractions.

Asset Management. While asset management is a key component of cash management, the expression of month-ending inventory levels on a dollar day's supply and unit day's supply should be noted and managed. Also calculate your actual individual inventory turn rates for the month and compare it to previous months.