Drinking Places - Alcoholic Beverages
NAICS 722410: This industry comprises establishments known as bars, taverns, nightclubs, or drinking places primarily engaged in preparing and serving alcoholic beverages for immediate consumption. These establishments may also provide limited food services.
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See The ROI's Retail Benchmarks Resource Center.
Quick What, Why & How answers. All FREE!
The segments featured at The ROI reflect the definitions and designations of the North American Industrial Classification System.
The ROI has selected 6 Key Ratios for retailers to monitor:
Pre-Tax Profit % • Gross Margin % • Inventory Turnover • Debt-to-Worth Ratio • Current Ratio • GMROI (Gross Margin Return on Inventory Investment)
And, The ROI has selected 6 Key Ratios for restaurant & food service operators to monitor:
Pre-Tax Profit % • Gross Margin % • Inventory Turnover • Debt-to-Worth Ratio • Current Ratio • Operating Expenses % of Sales
The ROI presents 5-Year Trend Charts of only the median value reported for each of these key ratios.
You may need to examine the benchmark numbers in more than one segment to get perspective on your own performance, particularly if your operation does not exactly fit the NAICS category.
©Copyright, The Retail Owners Institute®. Benchmark Trend Charts based on data from Risk Management Association Annual Statement Studies, 2019/2020. www.rmahq.org
The ROI's Quick Reference "Cheat Sheet"
The Formulas • Where to Find the Numbers • What Each Ratio Tells You
How to Calculate
Your Key Financial Ratios
Where to Find the Information
What the Ratios Tell
Current Ratio =
Current Assets divided by Current Liabilities
Your balance sheet
Tests for solvency or ability to meet current debt obligations. Measures how well you can cover current liabilities with liquid assets.
(Higher is better; 2.0 is average.)
Quick Ratio =
Cash + Accounts Receivable divided by Current Liabilities
Tests the degree of solvency most strictly, using only the most liquid current assets.
(Higher is better; 0.5 is average.)
Debt-to-Worth Ratio =
Total Liabilities divided by Total Owner's Equity
Compares what the company "owes" creditors to what it "owns." Measures the financial strength of the business.
(Lower is better; 1.0 is average.)
Inventory Turnover =
COGS (Cost of Goods Sold) divided by Average Inventory @Cost
COGS are recorded on your income statement; Inventory is found on your balance sheet.
Measures how often, at present rate of sales, your entire inventory is completely sold and replaced during a given year. Measures inventory "velocity."
(Higher is better; average depends on industry.)
Gross Margin % =
Gross Profit $ divided by Net Sales
Your income statement (P&L)
Indicates percentage of sales dollars remaining after costs related to purchasing merchandise are recognized.
Profit Before Taxes % =
Profit Before Taxes divided by Net Sales
Indicates percentage of sales dollars remaining after all costs (except taxes) are recognized.
Return on Assets (ROA) =
Profit Before Taxes divided by Net Assets
Your income statement and balance sheet
Indicates pretax return on assets; measures productivity of assets.
Gross Margin Return on Inventory (GMROI) =
Gross Margin $ divided by Average Inventory @Cost
Gross Margin - your income statement
Inventory @ Cost - your balance sheet.
Measures the gross margin returned for each dollar invested in inventory. (Higher is better; average depends on industry.)
©Copyright, The Retail Owners Institute® • www.RetailOwner.com • All rights reserved.
"How and when can these benchmark numbers be used?"
• Calculate these ratios for your own business, and then see how you compare to your retail industry segment.
For goal setting
• Use these benchmarks when you are setting your own target ratios for the next year.
• Seeking a bank loan for your business? The bankers will look at these industry benchmarks as they assess your store's performance.
• The credit departments of your vendors and landlords will examine your ratios to assess your credit worthiness.
For saving time
• Use The ROI's Key RATIOS Calculator to quickly calculate your own ratios.
Get answers at The ROI's Retail Benchmarks Resource Center. Free to everyone to use
See the how-to article: Go Figure! How to Calculate Your Key Ratios - in 12 Seconds Each!
Watch and listen to the recorded webinar: The Retail OWNER'S DASHBOARD
Very quickly, you can see how and why to monitor the true "vital signs" of your business.
About the Retail Segments
The segments featured at The ROI reflect the definitions and designations of the North American Industrial Classification System (NAICS).
The top of each Retail Segment Page on The ROI site includes the NAICS code and the NAICS definition for that industry segment.
About the Key Retail Ratios
The ROI has selected six key ratios (from the abundance of ratios available) that are particularly important for retailers to regularly monitor and manage. See The ROI's Benchmarks Resource Center to learn more about these key ratios for retailers.
The ROI's exclusive Retail Benchmark Trend Charts show the median value reported by Risk Management Association's Annual Statement Studies for each of these key ratios each year.
Remember, there also is a Top Quartile – and Bottom Quartile – of results for every segment. See your local library for those details.
As you examine the trends in any retail segment, here are some pro tips for you.
An upward trend is usually a good sign - with one exception. That is the Debt-to-Worth ratio, where lower is financially stronger, as it indicates less debt.
There really are no right or wrong ratios. However, examining the trends over time can provide early warnings of potential trouble spots.
Connecting the dots of the cause-effect connections can be very revealing. For more on that, see How to Use The ROI's Benchmark Numbers Like a Pro
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