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Small auto repair shops turn just a small profit

Rules of ThumbWhen it comes to profits, small auto repair shops in the United States aren't spinning their wheels, but they aren't running on rich fuel, either.

The country's 33,352 auto repair and service shops with assets of less than $100,000 cross the line with almost $17,000 in profits, according to the latest edition of the Almanac of Business and Industrial Financial Ratios. In these shops, annual revenues averaged $353,000.

Shops in this category spent the biggest chunk of their revenues on basic operating costs (47.9 percent). Expenses for raw materials and/or products for resale, direct labor costs, rent, utilities and supplies are considered operating costs.

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Other costs, which included repairs, bad debts, contributions and advertising, accounted for the next largest category of expense (21.2 percent). Payroll expenses averaged 13.3 percent. Officers' compensation came in at 6.8 percent, so at a shop pulling in the average $353,000 in revenues, that comes to $24,004.

On average, the shops had a current ratio of 1.8 to 1, and a quick ratio of 1.2 to 1. For an explanation of these ratios, and interactive calculators to help you figure your own business's ratios, see our new calculators page.

Auto shop expenses


-- Posted: March 8, 2000

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