Frequently Asked Questions

BizMiner Micro Firm Profit-Loss Reports Frequently Asked Questions (FAQs)

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The Sole Proprietor/Startup Profit & Loss series mirrors the more streamlined financial reports of many startup firms and sole proprietorships. Startups which are not structured as Sole Proprietorships, and SPs desiring a corporate-style balance sheet analysis, can utilize the small business and lower sales class versions of the Industrial Financial Profile series.

Inventory (% Sales): The stockpile of unsold products. Unlike corporate reports which show inventory as a percent of total assets, the sole proprietorship financial format displays Inventory as a percent of Sales.

Cost of Sales includes materials and labor involved in the direct delivery of a product or service. Other costs are included in the cost of sales to the extent that they are involved in bringing goods to their location and condition ready to be sold. Non-production overheads such as development costs may be attributable to the cost of goods sold. The costs of services provided will consist primarily of personnel directly engaged in providing the service, including supervisory personnel and attributable overhead.

COS-Labor Portion: This reporting format details labor from the materials and delivery portion of the total Cost of Sales.

Gross Profit represents direct operating expenses plus net profit. In addition to the labor portion of Cost of Sales, wage costs are reflected in the Officers Compensation and Wages-Salary line items. The Contract Labor-Commissions line item is reserved for non-employee labor, sales and related costs. In many cases, SG&A (Sales, General and Administrative) costs also include some overhead, administrative and supervisory wages.

The Taxes line item includes the employer portion of payroll tax on wages taken during the year as well as other paid-in tax items. Sole Proprietorships do not accrue federal business income taxes; Instead, Net Profit is assessed as owner’s wages. As a result, the Net Profit line item represents what is commonly referred to as Pretax Net Profitor Net Profit Before Tax. Although it is a controversial measure, the EBITDA line item (Earnings before interest, taxes, depreciation and amortization) adds back Interest PaidDepreciation-Amortization and Home Office expense to reduce the effect of “paper expenses” and accounting decisions on the bottom line of the Profit and Loss Statement. Since some firms utilized EBITDA is to “add back” non-cash and flexible expenses which may be altered through credits and accounting procedures (such as income tax), paid-in income taxes from the Taxes Paid line item are not added back in the EBITDA calculation.

Rent covers the rental cost of any business property, including land, buildings and equipment.

Insurance (non-health) costs include business liability and property insurance, but exclude employee health insurance, which is covered under the Benefits-Pension line item.

Advertising includes advertising, promotion and publicity for the reporting business, but not on behalf of others.

Benefits-Pension includes, but is not limited to, employee health care and retirement costs.
In addition to varying proportions of overhead, administrative and supervisory wages, some generally more minor expenses, including repairs and written-off debt, are aggregated under SG&A (Sales, General and Administrative).

The Total Direct Labor & NP line is developed to indicate overall labor costs, aggregating them as a percentage indicator for one-person sole proprietorships as well as larger operations. Total Direct Labor & NP sums the labor portion of Cost of Sales, Salary-Wages, Contract Labor-Commissions and Net Profit line items.


All Direct Expenses includes Cost of Sales plus Total Expenses from the Income & Expense table, less largely non-cash Amortization, Depreciation and Home Officeexpenses.

Net Cash adds back these non-cash expenses. This generally offers a more comprehensive picture of owner compensation, which will also vary with the actual proportion of owner labor.

Monthly Cash Flow tables are calculated on a straight-line sales basis. Different sales patterns alter monthly cash flow (but not annual totals).


Net Cash: Sales: (Retained Cash plus Net Profit) divided by Sales. Adds back non-out of pocket items (e.g., depreciation, amortization, home office) which show as expenses but largely do not reduce liquid assets.

Net Cash Turnover: Sales divided by Cash. Cash totals taken from the Cash Flow table less out of pocket expenses. Results too far from the benchmark may indicate overly conservative or aggressive liquidity policies.


Gross Profit: Sales: Gross Profit: divided by Annual Sales. This is the profit ratio before direct expenses. This ratio can indicate the "play" in other expenses which could be adjusted to increase the Net Profit margin.

EBITDA: Sales: Earnings Before Interest, income taxes due, Depreciation and Amortization divided by Sales. EBITDA: Sales is a relatively controversial (and often criticized) metric designed to eliminate the effect of finance and accounting decisions when comparing companies and industry benchmarks. Tax credits and deferral procedures and non-cash expenditures (Amortization and Depreciation) are not deducted from the profit equation, as are interest expenditures. In the case of sole proprietor reporting formats, the “before tax” refers to owner federal income taxes resulting from Net Profit, rather than federal corporate income taxes.

Return on Sales: Net Profit divided by Annual Net Sales, indicating the level of profit from each dollar of sales. Income taxes attributable to the Net Profit portion of proprietor income have not been deducted from Net Profit. This ratio can be used as a predictor of the company's ability to withstand changes in prices or market conditions. The ratio is often higher for startups and sole proprietorships due to owner compensation draws accounted as net profit.


Cost of Sales: Inventory: Cost of Sales divided by Inventory. This ratio reflects the number of times inventory is turned over during the course of the year. High levels can mean good liquidity or sales, or shortages requiring better management. Low levels may indicate poor cash flow or overstocking.

Days Inventory: 365 divided by (Cost of Sales: Inventory): Shows the average number of days of items in inventory. Positive inventory balance will align most closely with industry benchmarks.

EBITDA: Interest: Earnings before Interest, income axe due, Depreciation and Amortization divided by Interest expense. This ratio assesses financial stability by examining whether a company is at least profitable enough to pay interest expense. A ratio >1.00 indicates it is. See cautions in the listing for EBITDA.

Inventory Turnover: Sales divided by Inventory. Target at or slightly above industry level. This ratio indicates how quickly inventory turns over. Ratios below the industry norm suggest high levels of inventory. High ratios could indicate product levels insufficient to satisfy demand in a timely manner.

Total Labor: Sales: All direct compensation costs as a percentage of sales, including the labor cost portion of cost of sales, salary & wages, contract labor and commissions. Net Profit is also included for sole proprietorship and most startup operations because it is considered owner compensation.

Q: How does BizMiner industry financial content compare to RMA content?



Industry Financial Content



Detailed Industries (NAICS-6 and deeper)



Financial Ratios



Localized Financial Reporting

U.S. & 350

U.S. & 6 regions

Peer Group Breakouts

12 sales classes

6 asset classes

Sole Proprietorship Reports



Current Times Series






Profit & Loss Line Items



Balance Sheet Line Items



Cost of Sales/Goods Sold

90% of industries

Mfg. and retail only

Cost of Sales/Goods Sold: Labor Portion

90% of industries



dollar and percentage

percentage only
















Raw data analyzed for BizMiner reports is sourced from an array of the nation's private business databases, reporting agencies and government statistical sources, including the Internal Revenue Service, Bureau of Labor Statistics, and the Economic Census of available sectors. None of these raw data sources creates the final measures reflected in BizMiner industry profiles. In total, BizMiner accesses over half a billion sourced data points from eighteen million business operations for each of its twice annual updates. Census and other government data are used incidentally to inform and test projections for non-reporting firms.

At the same time, some firms are missed and specific information on others is lacking from the database. However, the overall current coverage of the databases approaches 12 million business operations annually. While 100% firm coverage is desirable for analysis purposes, the greatest value of the content rests in discerning patterns of activity, which are reflected in the large samples used to develop our reports. As is the case with any databases this large, some errors are inevitable. No representation is made as to the accuracy of the databases utilized or the results of subsequent analyses.

Sales volume figures are for firms identifying this as their primary classification. For example, a report for retail furniture stores analyzes sales of stores whose predominant revenue stream is furniture sales; that data would not include furniture sold at a general department store. Firms in more detailed industry segments may opt to identify a higher level parent classification as their primary line of business, effectively reducing sales applied to the detailed segment.

It is sometimes difficult to ascertain precise sales data for the smallest firms in the databases. When precise numbers are not available, reports that offer a sales range may be utilized. When there is a very small number of firms in a category (most often startups, which are by nature often micro-firms) the sales is recorded at 150,000 (reflecting a 100,000-175,000 range).

Neither the Brandow Company nor its resellers are responsible for conclusions drawn or decisions made based upon this data or analysis. In no event will the Brandow Company or its resellers be liable for any damages, direct, indirect, incidental or consequential resulting from the use of the information contained in BizMiner reports.