Blog · Finance metrics and formulas · Finance and FP&A teams
Landscaping financial ratios connect crew margins, labor costs, receivables and equipment investment. This operating review works through two service lines and shows how to reconcile their results to the branch accounts.
Landscaping industry financial ratios should connect crew profitability, customer collections and equipment use in the same review. Labor percentage and job margin show whether work pays for delivery; operating margin, receivable days and equipment turnover show what remains after overhead, delayed payment and capital investment. Compare recurring maintenance with maintenance and installation projects with installation projects.
A busy schedule does not prove that a branch earns an adequate return. Maintenance routes may generate predictable invoices but lose margin through travel time. Installation work may carry more materials and subcontractors, with cash arriving after completion. Keep those service lines visible before aggregating them.
Use a small set of measures with explicit definitions:
| Measure | Calculation | Decision it supports |
|---|---|---|
| Direct labor percentage | Direct labor cost / service revenue | Pricing, staffing and schedule review |
| Crew job margin | Revenue less identified job costs, divided by revenue | Which work contributes toward branch costs |
| Operating margin | Operating income / net revenue | Whether the branch covers operating expenses |
| Receivable days | Closing trade receivables / period credit sales × period days | Billing and collection follow-up |
| Equipment turnover | Period revenue / average net equipment assets | Whether equipment investment supports enough work |
The SEC's financial statement guide defines operating margin using income from operations divided by net revenue. Crew job margin is a management subtotal with the cost boundary stated below; it is not a substitute for that operating result. The broader financial ratios guide covers the general ratio families.
Bring the invoice register, job-cost report, payroll allocation, receivables aging and equipment register for the same branch and reporting dates. Each job needs a service type, customer, earned revenue, direct labor, materials, subcontractors and equipment charges. Separate cash sales from credit sales for the collection calculation.
Use earned service revenue consistently with the accounts. A customer deposit should not become revenue merely because cash arrived. Likewise, an unpaid earned invoice should remain visible in the receivables review. Investigate unbilled work and disputed invoices separately rather than forcing them into a collection denominator they do not belong in.
For labor, include the costs covered by your stated payroll policy, such as allocated employer payroll taxes and benefits. Include paid travel and setup time when they belong to service delivery. Leaving them unallocated can make every individual job look profitable while the branch loses money.
This fictional US landscaping branch has a 90-day quarter. Direct equipment costs below contain fuel, maintenance and rentals. Owned-equipment depreciation is held separately at the branch and deducted later. Dollar calculations are exact; percentages and days are rounded to one decimal, and equipment multiples to two decimals.
| Service line | Revenue (USD) | Direct labor (USD) | Materials (USD) | Subcontractors (USD) | Direct equipment costs (USD) |
|---|---|---|---|---|---|
| Maintenance | 360,000 | 144,000 | 36,000 | 12,000 | 18,000 |
| Installation | 240,000 | 120,000 | 60,000 | 24,000 | 12,000 |
| Total | 600,000 | 264,000 | 96,000 | 36,000 | 30,000 |
Crew job profit = Revenue − Direct labor − Materials − Subcontractors − Direct equipment costs
Crew job margin = Crew job profit / Revenue
| Service line | Direct cost calculation (USD) | Job profit calculation (USD) | Job margin | Labor percentage |
|---|---|---|---|---|
| Maintenance | 144,000 + 36,000 + 12,000 + 18,000 = 210,000 | 360,000 − 210,000 = 150,000 | 41.7% | 40.0% |
| Installation | 120,000 + 60,000 + 24,000 + 12,000 = 216,000 | 240,000 − 216,000 = 24,000 | 10.0% | 50.0% |
| Total | 426,000 | 600,000 − 426,000 = 174,000 | 29.0% | 44.0% |
The total margin is 174,000 / 600,000. It gives each dollar of revenue the same weight, rather than averaging the service-line percentages. Installation deserves a cost and scheduling review first, but the table alone does not establish whether its estimate, travel, overtime or scope changes caused the result.
The financial KPIs guide helps keep this operating selection within the company's wider finance reporting.
| Branch reconciliation | Amount (USD) |
|---|---|
| Total crew job profit | 174,000 |
| Less branch operating overhead | 90,000 |
| Less owned-equipment depreciation | 24,000 |
| Operating income | 60,000 |
| Opening net equipment assets | 460,000 |
| Closing net equipment assets | 500,000 |
| Average net equipment: (460,000 + 500,000) / 2 | 480,000 |
Operating margin is 60,000 / 600,000 = 10.0%. Equipment turnover for the quarter is 600,000 / 480,000 = 1.25 times. Operating income divided by average net equipment is 12.5% for this quarter; label it as that narrow management measure because it excludes other operating assets and is not a company return on invested capital.
The arithmetic check is 10.0% × 1.25 = 12.5%. The accounting check is that all job costs, branch overhead and depreciation appear once in the operating-income reconciliation. Tie the equipment register's net balances and depreciation to the ledger.
The IRS explains depreciation as recovering qualifying property costs over the time the property is used for tax purposes. For this operating review, use the book depreciation recorded in the accounts; a purchase payment and a period's depreciation expense answer different questions.
Do not annualize a peak quarter mechanically. Review a complete seasonal cycle before making a replacement or purchase decision.
| Service line | Quarter credit sales (USD) | Closing trade receivables (USD) | Calculation | Receivable days |
|---|---|---|---|---|
| Maintenance | 360,000 | 54,000 | 54,000 / 360,000 × 90 | 13.5 |
| Installation | 180,000 | 72,000 | 72,000 / 180,000 × 90 | 36.0 |
| Total | 540,000 | 126,000 | 126,000 / 540,000 × 90 | 21.0 |
Installation's remaining $60,000 of revenue was cash sales, so it does not belong in the credit-sales denominator. Using all $600,000 would report 18.9 days and make collection look faster. Tie the $126,000 to the receivables aging and trade receivables control account, then examine invoice dates, terms and disputes before chasing customers.
See days sales outstanding for seasonal collection methods. For outside comparisons, industry averages for financial ratios explains the separate job of selecting comparable benchmark data.
The branch manager owns the operating review with finance. Crew supervisors explain paid time and job-cost variances; the billing team explains unbilled work and receivables; the equipment manager explains availability, rental choices and asset changes.
If installation labor alone rises by $12,000, its direct costs become $228,000 and job profit becomes $12,000, or 5.0%. Total job profit falls to $162,000, a 27.0% margin. With branch overhead and depreciation unchanged, operating income becomes $48,000 and operating margin becomes 8.0%. That isolates the effect of one input before anyone changes prices or staffing.
Upload a file or Google Sheet containing your prepared service revenue, job costs, receivables and equipment balances; Covirage maps the columns, and its tools compute and check the figures. The external AI model explains the results with every figure traced to its rows. Create a free Covirage account, then set up your business and bring a sample of your own data.
See Covirage for finance teams for the supporting operating-finance context.
Start with labor cost percentage and crew job margin to understand delivery economics. Add operating margin for branch overhead, receivable days for collection and equipment turnover for capital use. Review recurring maintenance separately from installation projects because their materials, billing and equipment requirements differ.
Use both, with consistent periods. Monthly comparisons help explain scheduling and billing issues, while a full seasonal cycle captures idle months and equipment ownership costs. Compare a month with the corresponding prior-year month before interpreting a change as an operating improvement.
It depends on the company's cost policy. State whether depreciation is charged to individual jobs or held at the branch. Either approach can support a review, but include the expense once when reconciling crew results to operating income and keep the treatment consistent.