Do you want to start tattoo shop business?
Do you want to open tattoo shop ? Well, according to a report by Pew Research Center, 36 percent of Americans aged 18-25 have at least one tattoo. In other words, we can say that more than one-third of America’s young adults have tattoos! So, it will be safe to say that you’ll never run out of customers by starting a tattoo shop business provided that you plan and market it successfully.
Although this business yields immense profit yet its startup isn’t easy. Obtaining a license for it is very difficult and secondly, a lot of machinery and medical equipment is needed along with experienced tattoo artists. That’s why, before you move on to starting this business, you will have to prepare a comprehensive business plan which will not only help you acquire a license for it but will also serve as the basis of your company’s future operations. In case you don’t know how to write a business plan, you can take help from this sample business plan of a tattoo shop business startup named ‘Jerry’s Tattoo Studio’.
Executive Summary
2.1 The Business
Jerry’s Tattoo Studio will be a licensed and registered tattoo studio which will provide customized tattooing, body piercing and tattoo maintenance and removal services. The business will be based in downtown Chicago which is an ideal location for starting a tattoo shop.
2.2 Management
Jerry’s Tattoo Studio is a sole proprietorship owned by Jerry Tim. Jerry is a passionate tattoo designer who has been in this industry for more than 10 years. The company’s main management framework comprises of sales executives and tattoo artists.
2.3 Customers
Our customers include the young adults, adults, and celebrities based in Chicago. We will offer them a variety of tattoo designs as per their requirements.
2.4 Business Target
Our business targets to be achieved within next three years are as follows:
Company Summary
3.1 Company Owner
Jerry’s Tattoo Studio is a sole proprietorship owned by Jerry Tim. Jerry is a passionate tattoo designer who has been associated with tattoo industry for more than 10 years. Jerry is well aware of all health regulations related to this precarious work and has also taken a course on ‘Bloodborne Pathogens and Cross-Contamination Prevention’ from the Toronto Tattoo School.
3.2 Why the Business is being started
Jerry is passionate about tattoo designing and is known for creating exceptionally realistic tattoos. Tattooing is what he is made for and, being experienced in this industry, he knows how to open a tattoo shop. In addition to that, he aims to make profits in this industry by providing unparalleled tattooing services.
3.3 How the Business will be started
Jerry’s Tattoo Studio will be started in downtown Chicago in a leased location which was previously used by an IT agency. The facility features an open reception space, a small office space, a waiting room, a sterilization space, three tattoo stations and a bathroom. In addition to the usual inventory, the company will procure tattoo station equipment (2 tattoo chairs, lights, mirrors, tool box, trash bins, sharps container), sterilization room equipment (autoclave, ultrasonic unit, sterilization pouches), waiting area furniture (sofa seats, coffee table, 2 flash art binders), reception area items (a reception desk, cash register, laptop, credit card reader, phones), office equipment (phone, printer, scanner, photocopier), a digital camera, a sound system as well as tattooing supplies (sterilizers, disinfectants, antiseptics, ointments, paper products, towels, gloves, linens, thermofax, skin scribes and stencil paper). The financial experts have forecasted following costs for opening a tattoo shop:
The detailed start-up requirements are given below:
| Start-up Expenses | |
| Legal | $55,300 |
| Consultants | $0 |
| Insurance | $32,750 |
| Rent | $32,500 |
| Research and Development | $32,750 |
| Expensed Equipment | $32,750 |
| Signs | $1,250 |
| TOTAL START-UP EXPENSES | $187,300 |
| Start-up Assets | $220,875 |
| Cash Required | $332,500 |
| Start-up Inventory | $32,625 |
| Other Current Assets | $232,500 |
| Long-term Assets | $235,000 |
| TOTAL ASSETS | $121,875 |
| Total Requirements | $245,000 |
| START-UP FUNDING | |
| START-UP FUNDING | $273,125 |
| Start-up Expenses to Fund | $151,875 |
| Start-up Assets to Fund | $123,000 |
| TOTAL FUNDING REQUIRED | $0 |
| Assets | $23,125 |
| Non-cash Assets from Start-up | $18,750 |
| Cash Requirements from Start-up | $0 |
| Additional Cash Raised | $18,750 |
| Cash Balance on Starting Date | $21,875 |
| TOTAL ASSETS | $373,125 |
| Liabilities and Capital | $0 |
| Liabilities | $0 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $0 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $0 |
| Capital | $620,125 |
| Planned Investment | $620,125 |
| Investor 1 | $0 |
| Investor 2 | $0 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $620,125 |
| Loss at Start-up (Start-up Expenses) | $313,125 |
| TOTAL CAPITAL | $251,875 |
| TOTAL CAPITAL AND LIABILITIES | $251,875 |
| Total Funding | $255,000 |
Services for customers
Before starting a tattoo shop business, you must decide what kinds of services will you offer to your customers. There are more than 35,000 tattoo parlors open in the United States and for surviving in such competitive environment, you need to offer all those services which are offered by them. If you are offering more services than it will be a big competitive advantage for you. But, in any case, you need to decide your services before you plan to open a tattoo shop.
Jerry’s Tattoo Studio will be a licensed and registered tattoo studio which will provide following services to its customers:
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- Customized Tattoos: Our primary service includes designing of customized tattoos. Customers can either provide a picture of what they want or can just communicate their requirements. They can also choose a design from the set of our tattoo designs comprising of traditional, neo-traditional, realistic, watercolor, Japanese, tribal and blackwork tattoos.
- Body Piercings: A body piercing is a piercing or puncture made in the body by a needle for the purpose of inserting a piece of jewelry in the hole. Commonly pierced body parts are the ears, nose, and the belly button while there are also oral piercings which include the piercing of lip, cheek, and tongue. We will offer high-quality piercing services following all safety regulations.
- Tattoo Aftercare: We will provide tattoo aftercare and tattoo maintenance services and will also provide consultation and advice on how to take care of tattoos.
- Laser Tattoo Removal: We will also provide laser tattoo removal services for removing the permanent tattoos from the bodies of our customers.
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Our customers can make a reservation with us by visiting our shop or through our official website. They can also choose a design from the set of tattoos displayed on our website.
Marketing Analysis of tattoo shop business
The most important component of an effective tattoo shop business plan is its accurate marketing analysis and a good tattoo business plan can only be developed after this stage. If you are starting on a smaller scale, you can do marketing analysis yourself by taking help from this tattoo business plan template or any other tattoo shop business plan free available online. If you are starting on a larger scale, it is always best to seek the counsel of marketing experts for developing a good tattoo parlor business plan .
The success or failure of a business totally depends upon its marketing strategy which can only be developed on the basis of accurate marketing analysis. Therefore, it must be considered before you think about how to start a tattoo business plan.
5.1 Market Trends
The tattoo industry adds $722 million every year in revenue to the United States and the industry is currently growing at the rate of 9.8 percent. There are more than 35,000 registered open tattoo shops which employ more than 54,000 people. However, a unique thing about this industry is that there is no tattoo studio which possesses a lion share in the market. The tattoo industry is the sixth fastest-growing retail business in the United States and more than one-third of America’s young adults (aged 18-25) have tattoos. In short, tattoo industry has a lot of potential and can be immensely profitable provided that you plan your business successfully.
5.2 Marketing Segmentation
Our target market is the residential community based in Chicago. The community consists of people from varying backgrounds, most of which are financially stable. As per the population distribution, 40.4% of population live singly, 18.9% are females with no husband, 35.1% are married couples who are living together and 28.8% population has children under the age of 18 living with them. The median for a household income in the city was $38,625 in 2000, and the median family income was $46,748.
It is very important to analyze the market segmentation of your future customers before starting a tattoo business plan because a successful and efficient marketing strategy for business can only be developed after we completely know our potential customers. Our experts have identified the following type of target audience which can become our future consumers:
The detailed marketing segmentation of our target audience is as follows:
5.2.1 Young Adults: Our first target group will be the young adults between 18 and 25 years of age. According to a report by Pew Research Center, 36 percent of Americans aged 18-25 have at least one tattoo. This target group will have the biggest contribution to our revenue so our marketing strategy will be specially built to attract the young adults in Chicago.
5.2.2 Adults: Our second target group comprises of adults aged above 25 years. These adults also have tattoos but their number is comparatively less than the young adults.
5.2.3 Celebrities: The third target group comprises of celebrities such as actors, public figures, and sportsmen and women. This target group contains all important customers so it will be directly dealt by Jerry himself.
The detailed market analysis of our potential customers is given in the following table:
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Celebrities | 25% | 11,433 | 13,344 | 16,553 | 18,745 | 20,545 | 13.43% |
| Young Adults | 45% | 22,334 | 32,344 | 43,665 | 52,544 | 66,432 | 10.00% |
| Adults | 30% | 12,867 | 14,433 | 15,999 | 17,565 | 19,131 | 15.32% |
| Total | 100% | 46,634 | 60,121 | 76,217 | 88,854 | 106,108 | 9.54% |
5.3 Business Target
Our main business targets to be achieved as milestones over the course of next three years are as follows:
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- To achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
- To balance the initial cost of the startup with earned profits by the end of the first year
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5.4 Product Pricing
After considering the market demands and the competitive environment, we have priced our tattooing services 5 percent cheaper than that of our competitors. There is no fixed price for tattooing and the prices depend on the type of tattoo and the number of hours required to work on that. The base price will start from $75 and the hourly rate of the session will depend on the tattoo type.
Strategy
After identifying the market trends, market demand, and the potential customers of the startup, the next step is to define an effective strategy to attract the potential customers. Like marketing analysis, sales strategy is also an important component and must be properly developed before thinking about how to open a tattoo shop.
6.1 Competitive Analysis
Our biggest competitive advantage will be the quality of our tattoos which will also be attractive and eye-catching. In addition to that, our second biggest competitive advantage will be our exceptional customer service. We will make sure that our customers get the best tattoo which suits their personalities. We will work with customers to search for designs that will look perfect on them. Our location is also one of our biggest competitive advantages since we will be based in downtown which is considered an ideal location to start a tattoo business.
6.2 Sales Strategy
After carrying out a detailed analysis, our experts came up with the following brilliant ideas to advertise and sell ourselves.
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- We will emphasize on our search engine marketing efforts to ensure a strong web presence.
- We will get featured in the local news or on a certain website by a popular blogger to increase our popularity.
- We will advertise our tattoo shop in magazines, newspapers, TV stations, and social media.
- We will offer a 5% discount on our services for the first month of our launch.
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6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Customized tattoos | 1,887,030 | 2,680,320 | 2,588,240 |
| Body piercings | 802,370 | 815,430 | 823,540 |
| Tattoo aftercare | 539,320 | 770230 | 1,002,310 |
| Laser tattoo removal | 265,450 | 322,390 | 393,320 |
| TOTAL UNIT SALES | 3,494,170 | 4,588,370 | 4,807,410 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Customized tattoos | $140.00 | $150.00 | $160.00 |
| Body piercings | $600.00 | $800.00 | $1,000.00 |
| Tattoo aftercare | $700.00 | $800.00 | $900.00 |
| Laser tattoo removal | $650.00 | $750.00 | $850.00 |
| Sales | |||
| Customized tattoos | $2,149,800 | $2,784,000 | $3,383,200 |
| Body piercings | $120,050 | $194,500 | $268,500 |
| Tattoo aftercare | $50,110 | $71,600 | $93,000 |
| Laser tattoo removal | $139,350 | $194,600 | $249,850 |
| TOTAL SALES | |||
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Customized tattoos | $0.70 | $0.80 | $0.90 |
| Body piercings | $0.40 | $0.45 | $0.50 |
| Tattoo aftercare | $0.30 | $0.35 | $0.40 |
| Laser tattoo removal | $3.00 | $3.50 | $4.00 |
| Direct Cost of Sales | |||
| Customized tattoos | $989,300 | $1,839,000 | $2,679,700 |
| Body piercings | $66,600 | $119,900 | $173,200 |
| Tattoo aftercare | $17,900 | $35,000 | $52,100 |
| Laser tattoo removal | $19,400 | $67,600 | $115,800 |
| Subtotal Direct Cost of Sales | $1,294,100 | $1,699,400 | $2,104,700 |
Personnel plan
Personnel plan is also an important component of a good business plan for a tattoo shop so make sure to duly consider it before thinking about how to start a tattoo shop business plan. The personnel plan of our company is as follows.
7.1 Company Staff
Jerry will act as the General Manager of the company and will initially hire following people:
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- 1 Accountant for maintaining financial and other records
- 2 Sales Executives responsible for marketing and discovering new ventures
- 3 Tattoo Artists for tattooing the customers
- 3 Assistants for helping with day-to-day operations
- 1 Technical Assistant for managing the company’s official website and social media pages
- 2 Customer Representatives for interacting with customers and recording their orders
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All the employees will be hired by following strict testing procedures and will also be trained before onboarding.
7.2 Average Salary of Employees
The following table shows the forecasted data about the salaries of the employees for the next three years. These salaries are just an estimate and are also expected to deviate but the overall expenses will be more or less the same.
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Accountant | $85,000 | $95,000 | $105,000 |
| Sales Executives | $45,000 | $50,000 | $55,000 |
| Tattoo Artists | $410,000 | $440,000 | $480,000 |
| Assistants | $152,000 | $159,000 | $166,000 |
| Technical Assistant | $87,000 | $94,000 | $101,000 |
| Customer Representatives | $220,000 | $250,000 | $280,000 |
| Total Salaries | $562,000 | $599,000 | $646,000 |
Financial Plan
The financial plan covers all the expenses needed for the startup so you must develop it before you think about how to open tattoo shop . The financial plan should craft a detailed map about the cost of inventory, payroll, equipment, rent, and utilities needed for the startup and how these costs will be covered by the earned profits. It is recommended that you hire a financial expert for guiding you through all financial aspects needed to start a tattoo business.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10.00% | 11.00% | 12.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 26.42% | 27.76% | 28.12% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
| Brake-Even Analysis | |
| Monthly Units Break-even | 5530 |
| Monthly Revenue Break-even | $159,740 |
| Assumptions: | |
| Average Per-Unit Revenue | $260.87 |
| Average Per-Unit Variable Cost | $0.89 |
| Estimated Monthly Fixed Cost | $196,410 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $309,069 | $385,934 | $462,799 |
| Direct Cost of Sales | $15,100 | $19,153 | $23,206 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $15,100 | $19,153 | $23,206 |
| Gross Margin | $293,969 | $366,781 | $439,593 |
| Gross Margin % | 94.98% | 94.72% | 94.46% |
| Expenses | |||
| Payroll | $138,036 | $162,898 | $187,760 |
| Sales and Marketing and Other Expenses | $1,850 | $2,000 | $2,150 |
| Depreciation | $2,070 | $2,070 | $2,070 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $4,000 | $4,250 | $4,500 |
| Insurance | $1,800 | $1,800 | $1,800 |
| Rent | $6,500 | $7,000 | $7,500 |
| Payroll Taxes | $34,510 | $40,726 | $46,942 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $188,766 | $220,744 | $252,722 |
| Profit Before Interest and Taxes | $105,205 | $146,040 | $186,875 |
| EBITDA | $107,275 | $148,110 | $188,945 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $26,838 | $37,315 | $47,792 |
| Net Profit | $78,367 | $108,725 | $139,083 |
| Net Profit/Sales | 30.00% | 39.32% | 48.64% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $40,124 | $45,046 | $50,068 |
| Cash from Receivables | $7,023 | $8,610 | $9,297 |
| SUBTOTAL CASH FROM OPERATIONS | $47,143 | $53,651 | $59,359 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $47,143 | $53,651 | $55,359 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $21,647 | $24,204 | $26,951 |
| Bill Payments | $13,539 | $15,385 | $170,631 |
| SUBTOTAL SPENT ON OPERATIONS | $35,296 | $39,549 | $43,582 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $35,296 | $35,489 | $43,882 |
| Net Cash Flow | $11,551 | $13,167 | $15,683 |
| Cash Balance | $21,823 | $22,381 | $28,239 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $184,666 | $218,525 | $252,384 |
| Accounts Receivable | $12,613 | $14,493 | $16,373 |
| Inventory | $2,980 | $3,450 | $3,920 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $201,259 | $237,468 | $273,677 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $12,420 | $14,490 | $16,560 |
| TOTAL LONG-TERM ASSETS | $980 | $610 | $240 |
| TOTAL ASSETS | $198,839 | $232,978 | $267,117 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $9,482 | $10,792 | $12,102 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $9,482 | $10,792 | $12,102 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $9,482 | $10,792 | $12,102 |
| Paid-in Capital | $30,000 | $30,000 | $30,000 |
| Retained Earnings | $48,651 | $72,636 | $96,621 |
| Earnings | $100,709 | $119,555 | $138,401 |
| TOTAL CAPITAL | $189,360 | $222,190 | $255,020 |
| TOTAL LIABILITIES AND CAPITAL | $198,839 | $232,978 | $267,117 |
| Net Worth | $182,060 | $226,240 | $270,420 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 4.35% | 30.82% | 63.29% | 4.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 5.61% | 4.71% | 3.81% | 9.70% |
| Inventory | 1.85% | 1.82% | 1.79% | 9.80% |
| Other Current Assets | 1.75% | 2.02% | 2.29% | 27.40% |
| Total Current Assets | 138.53% | 150.99% | 163.45% | 54.60% |
| Long-term Assets | -9.47% | -21.01% | -32.55% | 58.40% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.68% | 3.04% | 2.76% | 27.30% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 25.80% |
| Total Liabilities | 4.68% | 3.04% | 2.76% | 54.10% |
| NET WORTH | 99.32% | 101.04% | 102.76% | 44.90% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 94.18% | 93.85% | 93.52% | 0.00% |
| Selling, General & Administrative Expenses | 74.29% | 71.83% | 69.37% | 65.20% |
| Advertising Expenses | 2.06% | 1.11% | 0.28% | 1.40% |
| Profit Before Interest and Taxes | 26.47% | 29.30% | 32.13% | 2.86% |
| Main Ratios | ||||
| Current | 25.86 | 29.39 | 32.92 | 1.63 |
| Quick | 25.4 | 28.88 | 32.36 | 0.84 |
| Total Debt to Total Assets | 2.68% | 1.04% | 0.76% | 67.10% |
| Pre-tax Return on Net Worth | 66.83% | 71.26% | 75.69% | 4.40% |
| Pre-tax Return on Assets | 64.88% | 69.75% | 74.62% | 9.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 19.20% | 21.16% | 23.12% | N.A. |
| Return on Equity | 47.79% | 50.53% | 53.27% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 4.56 | 4.56 | 4.56 | N.A. |
| Collection Days | 92 | 99 | 106 | N.A. |
| Inventory Turnover | 19.7 | 22.55 | 25.4 | N.A. |
| Accounts Payable Turnover | 14.17 | 14.67 | 15.17 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 1.84 | 1.55 | 1.26 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | -0.02 | -0.04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $120,943 | $140,664 | $160,385 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.45 | 0.48 | 0.51 | N.A. |
| Current Debt/Total Assets | 4% | 3% | 2% | N.A. |
| Acid Test | 23.66 | 27.01 | 30.36 | N.A. |
| Sales/Net Worth | 1.68 | 1.29 | 0.9 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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