 |
CONSTRUCTION, REAL ESTATE & MINERALS INDUSTRY NEWS
|
| February 2017
|
|
|
How is the Market Shaping Up for Construction in the Ohio Valley in 2017?
We want you to be a part of Harding, Shymanski & Company, P.S.C.'s second Ohio Valley Construction Market Outlook Survey. We invite construction businesses headquartered in or whose businesses perform construction work in the Ohio Valley Region* to participate. Join construction executives throughout the region in reporting current company financial data as well as your perspective on the market's outlook for 2017.
By taking our 15-minute survey, you will help identify regional trends that may directly influence your business in the coming year. You'll receive a free, bound copy of our research report and will be invited to attend a forum to discuss the survey results later this Spring.
The survey is open now through Friday, March 3rd.
The study is being conducted by Harding, Shymanski & Company, P.S.C. and all responses will be held in strictest confidence. Please call Paul Esche, CPA, CCIFP, CCA at 800.880.7800 ext. 1335 with questions.
*Ohio Valley Region includes:
Southeastern Illinois, Southern Indiana (from Marion County south), Southwestern Ohio, Western and Central Kentucky as far east as Fayette County.
|
Takeaways from the Benchmarker Questionnaire Results
For construction companies, the CFMA's Construction Financial Benchmarker is an essential tool to measure how a company is comparing to the industry. In early 2016, the CFMA and Industry Insights received approximately 869 responses from Construction companies concerning the Online Questionnaire according to the CFMA Building Profits. This questionnaire is a confidential and industry-specific benchmark that breaks down construction companies data into subgroups such as Industrial & Non-residential, Heavy/Highway, etc. According to the CFMA, the subgroups by the percent of companies that responded were Industrial & Non-residential contractors (37%), Heavy/Highway contractors (19%), Specialty Trade contractors (43%), and Other (less than 1%. The average annual sales amounted to approximately $40 million for the companies across-the-board. A summary of the results follow below.
Financial Information
The highlights from the questionnaire included profitability ratios that showed an increase in 2015. According to the questionnaire, Return on Assets (ROA) increased from 6.9% in 2014 to 9% in 2015. Return on Equity (ROE) also increased from 19% in 2014 to 25.3% in 2015. In 2014, days outstanding in A/R was 53.8 days, but that climbed to 55.4 days in 2015; however, for days outstanding in A/P saw the reverse trend with it being 35.6 days in 2014 compared to 33.4 days in 2015. Gross profit margins are crucial for any business, and the questionnaire revealed that on average, gross margins for all companies saw a marginal increase from 13.1% in 2014 to 15% in 2015. Finally, the bottom line - net incomes also rose marginally from 3.1% in 2014 compared to 4.4% in 2015.
"Best in Class"
There were specific companies that excelled in the comparative categories. The best in class, or the top 25 percent of the 869 companies that provided financial information from 2015, stood out several key areas. In 2015, the best in class companies had an ROA of 24%, compared to the average of 9%, and they had an ROE of 58.5% compared to the average of 25.3%. Best in class companies also saw an average gross profit margin of 18.4% in 2015 compared to the average of 15%. Additionally, the best in class averaged higher net income before taxes of 8.4% compared to the 4.4% earned by the average company. Finally, best in class companies saw debt to equity ratios of 1.2 compared to 1.8 on average, had a better fixed asset ratio (16.6% compared to 25.1% on average), and they also had better employee productivity seeing on average $60,000 in gross profit per employee compared to $46,000 for the average company.
How to Use the Results
Benchmarks are helpful tools that can provide historic data to help your company move forward. This questionnaire actually breaks down by region and by specific groups within the construction industry. Please refer to the article and information related to the article for a more detailed overview. According to the CFMA, the 2016 Construction Financial Benchmarker Online Questionnaire was conducted by CFMA's Financial Survey & Benchmarker Committee, and the results were compiled and analyzed by Industry Insights along with the committee itself.
Click here to read the full article.
|
Protect Your Company with the IRS' Construction Industry Audit Technique Guide
Due to increase IRS scrutiny in the construction industry, companies should understand the issues the IRS focuses on. The IRS' Construction Industry Audit Technique Guide provides the agenda of an IRS audit. This guide focuses on topics such as accounting methods, look-back interest calculations, reasonable compensation, and accumulated earnings. Accounting methods for the construction industry are numerous and complex, and a conversation with a tax advisor on any changes could mitigate any potential losses due to an audit. The IRS is looking for the Form 8697, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts, on any company that uses the percentage-of-completion method. Be sure that this form is filed with your tax return. Finally, C corporations should be careful not to avoid taxation by paying unreasonably high compensation or holding their accumulated earnings and profits beyond the reasonable needs of the business. Regular distribution of dividends is one way to avoid serious IRS investigations. For best practices, construction companies should properly plan and accumulate documentation on the topics mentioned in the guide. In any of these situations, or the many other audit areas provided, please consult with a tax advisor to mitigate potential IRS audits.
Click here to read the full article.
|
UPCOMING EVENTS
Thursday, March 2, 2017
"Optimizing Collaboration to Drive Productivity and Profitability" Seminar
Presented by AGC of Indiana and CFMA
You will learn how to integrate top management and project management, which is critical to productivity improvement.
7:30 a.m. - 8:00 a.m. CT - Registration, networking, and breakfast buffet 8:00 a.m. - 10:30 a.m. CT - Program (CE hours will be available)
Pricing: $25 for HSC clients, AGC of Indiana and CFMA members; $50 for non-members
|
ABOUT OUR CONSTRUCTION, REAL ESTATE AND MINERALS INDUSTRY
Because Harding, Shymanski & Company, P.S.C. is committed to providing quality service to our construction, real estate, and mineral industry clients, we have selected a team of dedicated professionals to serve as your industry's consultants. These individuals understand the language and key issues unique to your industry and posses the drive and determination to help you manage your company on a proactive basis. |
SEE WHAT ARE CLIENTS ARE SAYING...
"I would highly recommend HSC for all your consulting, audit and tax needs."
Greg Koberstein, CEO
Koberstein Contracting, Inc.
|
|
|
|
Harding, Shymanski & Company, P.S.C.
800-880-7800 | info@hsccpa.cm | www.hsccpa.com
|
|
|
STAY CONNECTED: 
| |
|
|
|
|
 |