October 5, 2016 admin

Glossary

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  • a

  • Amounts owed to others, generally on open account, as a result of delivered goods or completed services.
  • Amounts owed by others, generally on open account, and usually for sales of vehicles, parts, accessories, and services.
  • Estimated or actual amounts of income or expense, and their related assets or liabilities, which are identifiable with the current period but which will not be recorded in the ordinary course of business until a subsequent period.
  • The method of recognizing revenues as goods are sold (or delivered) and as services are rendered, independent of the time when payment is received. Expenses are recognized in the period when the related revenue is recognized independent of the time when settlement is made.
  • One Type Of Current Liability. Obligations to pay, within 12 months of the date of the Balance Sheet, amounts for which the dealership has not yet been billed, but for which obligations were incurred by the dealership in the accounting periods prior to the date of the Balance Sheet.
  • Estimated wholesale value of an asset (usually a used vehicle) less the estimated cost of bringing the asset to a saleable condition.
  • Estimated wholesale value of an asset (usually a used vehicle) less the estimated cost of bringing the asset to a saleable condition.
  • Monies or credits received or accrued by the dealership which are either not part of a departmental sale or income (non-operating) or not relevant to the current Accounting Period. Typical items are: interest earned, discount earned by prompt payment of Accounts Payable and Bad Debts Recovered (Accounts Receivable which were previously removed from inventory as uncollectible.)
  • The accounting correction of an error, an accrual, a write-off or a provision for expenses or losses.
  • Operating expenses of a general or indirect nature; expenses which are not directly charged to one or more of the operating departments. Dealers often refer to these as "Z Accounts."
  • An analysis of the elements of individual accounts receivable according to the time elapsed after the dates of billing. The receivable amounts are usually spread into 30-60-90 day and over 90 day categories for purposes of analysis and follow-up action.
  • An accumulation of amounts previously charged as bad debt expense in anticipation of losses which may result from the inability to collect certain customer accounts and notes receivables.
  • The accumulated total of amounts previously charged since the last physical inventory in anticipation of a difference between the book value of inventories and the estimated value of the next physical inventory.
  • The process of systematically allocating the cost of an asset to expense over the periods benefited.
  • Annualized
  • All items of value, either tangible or intangible, owned by a business.

  • b

  • Receivables determined to be uncollectible.
  • A statement of financial condition (position) of the dealership as of a specific date. What the business owns (Assets) are "in balance" (balanced out) by what that business owes to outsiders (Liabilities) plus what is owed to insiders (Owners' Equity or Net Worth).
  • An inventory amount that results, not from physical count, but from amount of initial inventory plus cost amounts of purchases and returns less cost amounts for withdrawals, sales and "relief-of-inventory" transfers.
  • The amount shown in the "books" (accounting records) for any asset, liability or owners' equity. Generally used in reference to a Fixed or Working Asset (individually or a group) entered at original cost and reduced by accumulated Accounting Depreciation to date. See also Net Book Value.
  • The number of new cars that must be sold each month or year before a net profit for the dealership can be realized.
  • In New Units. Net operating cost divided by total variable gross P.N.V.S. Net new unit sales required to cover net operating cost.

  • c

  • Those assets which have been purchased (but not held for resale) to support the ongoing nature of the business.
  • The ownership shares of a corporation authorized by its articles of incorporation and board of directors.
  • The total vehicle selling price including add-ons, markups, fees of a lease contract prior to any capitalized reductions (i.e., cash down payment or trade-in).
  • An amount paid by the Lessee to reduce the Capitalized Cost of the vehicle; similar to a down payment; includes cash and trade-ins.
  • Charges included in the Capitalized Cost. 1) An amount of money paid to the lessor to reduce the lease balance prior to the payment calculation. 2) The amount of equity in a trade-in vehicle which also reduces the lease balance.
  • Cash and other items which for all practical purposes could be converted to cash on short notice. These include contracts and securities, vehicle receivables, receivables from dealerships, LIFO reserve vehicles, new vehicle equity, demonstrators net and rental vehicles net less customer sales deposits in trust.
  • The amount of dealer reserve charged back to a dealership by the finance or insurance company as a result of the cancellation or early payment of financing or insurance coverage by the customer. Sometimes, in return for accepting a smaller reserve, the dealer can elect a "no chargeback" option.
  • The structural foundation of an accounting system, establishing the classifications under which transactions are reported. Vital as a guide to accounting uniformity and providing an organized system. Accounts are number-coded as a memory aid, a time saver and to facilitate machine accounting.
  • An account used to record a series of transactions, the resulting balance of which is transferred to one or more accounts.
  • Also called Gross Payable. The portion of profit from the sale of a vehicle used to calculate a salesperson's commission. The figure is derived from the total selling price, accessories, and dealer options less the dealer's cost in the vehicle and any other non-commissionable items (i.e., pack, adjustments, repair orders, etc.).
  • A possible liability or obligation, relating to a past transaction or event, that may or may not come a legal obligation in the future.
  • A summary account that shows totals of entries and balances that appear in individual accounts in a subsidiary ledger. Accounts Receivable is a control account backed up with accounts for each customer.
  • A vehicle's base inventory value at which the dealership could sell it with no profit. This value may be calculated differently from one dealership to another.
  • The amount paid for (cost) goods or services sold during a given accounting period.
  • An entry used to record the reduction or elimination of an asset or expense, or the increase to/ creation of a liability or item of net worth/income (as compared to debit).
  • Current
  • Cash, receivables, inventories and other assets which are readily converted into cash within a relatively short period of time, usually one year or less. Includes items classified as prepaid expenses.
  • Amounts owed by a business which are due and payable within the next twelve months from the date of the Balance Sheet.
  • Total current assets divided by total current liabilities is an indication of working capital position. Guide: Should be 2 to 1 (2:1) ratio.
  • Price concession granted by a dealership to a customer even though the dealership does not view itself culpable, but is unable to gain customer acceptance of that view. If dealership accepts culpability, it would grant a Policy Adjustment to the customer.

  • d

  • Dealer
  • Days Supply
  • A report intended to keep dealership management informed as to their daily progress toward their sales, profit, expense and inventory goals. Often includes other pertinent data.
  • A report intended to keep dealership management informed as to their daily progress toward their sales, profit, expense and inventory goals. Often includes other pertinent data.
  • Profit generated from the sale of a finance contract to a lender where the interest rate charged to the seller is lower than the rate charged to the buyer, the difference of which is the dealer's retained profit. Also applies to the sale of credit life, accident and health insurance, extended warranties, physical damage insurance, and F&I accessories.
  • Exchange or sale of new vehicle(s) between dealerships representing same manufacturer.
  • An entry used to record the increase or creation of an asset or expense, or the reduction or elimination of a liability.
  • The amount of borrowed capital compared to the dealer's invested capital. Guide: The debt-to-equity ratio should be no more than 1 to 1 (1:1).
  • Obligations incurred, monies spent or not received as agreed which are not part of normal operations (non-operating) or not allocated to any particular department or not relevant to the accounting period of the operating statement. Deductions are such items as interest on loans, reserve to cover overage Accounts Receivable (Adjustment For Doubtful Accounts Allowance), or Loss On The Sale Of A Depreciated Asset. A non-operating adjustment to income
  • Excess of a department's gross profit over that department's expenses. May be before or after considering pro-rated administrative expenses.
  • A systematic write-off of the cost of capital assets over their estimated useful life.
  • A form that displays all the credit life insurance, payment, and finance or lease deal. Price, rate, term, down payment, APR, amount financed, sales tax, documentation fees, and licensing fees are typically printed on a disclosure form. See Regulation Z.
  • A fee charged by the Lessor to cover the cost associated with selling the vehicle at the end of the lease when the vehicle is returned.
  • The portion of accumulated profits distributed to the stockholders of a corporation, usually in the form of cash.
  • An amount of money paid to the dealer to reduce the balance of the loan prior to calculating the finance charge on the amount financed. This reduces the amount financed.

  • e

  • Employee
  • The difference between the Estimated Mileage and the Allowable Mileage.
  • A fee charged by the Lessor to repair vehicle damage which is more than what would be normally expected for a vehicle of the same type, operated under normal driving conditions.
  • All costs incurred in operating a business enterprise, other than the cost of merchandise purchased for resale (cost of sales).
  • A plan available at extra cost to a vehicle purchaser to cover the cost of specified vehicle repairs/replacements after the expiration of a standard or Extended Warranty on that vehicle.
  • A plan available at extra cost to a vehicle purchaser to cover the cost of specified vehicle repairs/replacements after the expiration of a standard or Extended Warranty on that vehicle.
  • An optional cost agreement wherein a vehicle buyer obtains a longer than standard warranty from the vehicle manufacturer.

  • f

  • First In First Out. Cost of sales is determined from oldest purchases in inventory. See LIFO.
  • Dealership income earned as a result of a retail sale of vehicles being financed and/or insured through the dealership.
  • Dealership income earned as a result of a retail sale of vehicles being financed and/or insured through the dealership.
  • The charge for financing a vehicle over the term of the loan. The finance charge is based on the amount financed by the customer for a vehicle, the annual percentage rate, and the term of the loan.
  • A portion of the finance charges (interest) on a vehicle retail sale finance contract which is earned by a dealership and paid to it by the financing institution for services performed by dealership and any contingent liability the dealership may assume. Usually a percentage of the net amount financed. Percentage may vary by finance term, degree of dealership liability and state regulations.
  • A format for the presentation of financial data derived from the accounting records.
  • Relatively permanent assets owned by a dealership with these characteristics: a. Useful life to dealership longer than one year. b. Used in the operation of the dealership business. c. Not for sale during the planned useful life period. Examples are buildings, equipment and Leasehold Improvements. Entered at acquisition cost. Also called Fixed Capital. Except for land, Fixed Assets are depreciated each accounting period.
  • No industry standard. Proportion of total Total Fixed Overhead Expenses covered by gross profits from the Parts, Service (Mechanical and Body), Departments, i.e., the Fixed Gross divided by the Fixed Overhead. Usually expressed as a percentage. Also called Absorption. N.A.D.A. published statistics ar computed by converting all dealership financials to the G.M. format. It usually is not meaningful for dealers to compare their fixed coverages unless they use the same accounting system.
  • Those dealership expenses which remain almost unchanged from month to month. This is a sub-group of Total Fixed Overhead Expenses.
  • Total Gross Profit of the Service (Mechanical and Body) and Parts and Accessories Departments.
  • Amount of Fixed Overhead Expenses not covered by Fixed Gross Profit. Fixed Overhead Expenses minus Fixed Gross Profit. Sometimes called Burden. See also Net Burden.
  • Includes Mechanical and Body Service Departments and Parts & Accessories Department; those portions of the dealership less responsive to seasonal and economic fluctuations.
  • Expenses. All dealership expenses other than Variable Selling Expenses. Fixed Overhead is sub-divided into Personnel, Semi-Fixed and Fixed Expenses on many accounting systems. Definition varies for some accounting systems.
  • Price/cost/time relationship for services and repair work. Work operations are assigned a number of hours for which worker is paid and customer charged, regardless of elapsed time to perform work. Manufacturers publish Flat Rate (also called Labor Time Guides) for all regular mechanical and body repair operations. See Straight Time Operation.
  • The sale of a "fleet" of vehicles to one person or company, generally used for business reasons. Most vehicles in a fleet sale are the same model and similar options and colors.
  • Wholesale financing of dealership vehicle inventory. The amount obtained from a financing institution by a dealership on direct loans secured by a vehicle in dealership inventory. Loan should be paid at the time the vehicle (security) is sold or placed in dealership use. Used Vehicle floor planning is not condoned by franchisors under normal circumstances.
  • Loans by financial institutions to an automobile dealership secured by specific vehicles purchased by the dealership for resale purposes.
  • Floor plan expenses or allowances paid by factory to dealership or to dealership floor-planning source. Time period for free floor plan is part of the Selling Agreement and is usually a function of the holdback amount and holdback payment schedule.
  • Assets that are difficult to turn into cash, such as obsolete parts, over-aged vehicle inventories, past due accounts receivable or excessive equipment.

  • g

  • A book of final entry in which all the various journals are posted.
  • Gross Per Vehicle Leased
  • The Capitalized Cost, usually before subtracting the Capitalized Cost Reduction. May not include other items such as the Acquisition Fee, Warranties, etc.
  • Used to calculate salesman commissions, usually the vehicle gross less any pack and hold back.
  • 1.The total amount of profit generated from selling or leasing a vehicle to a customer. (Sum of the Sale Profit, Finance Reserve, and Insurance Reserve.) 2. The difference between net sales and the cost of sales.
  • Group
  • Gross
  • Computed amount equal to the recommended minimum working capital plus net equipment and finance receivables deferred. Suggested minimum operating investment to capitalize a dealership.
  • Computed amount equal to the recommended minimum working capital plus net equipment and finance receivables deferred. Suggested minimum operating investment to capitalize a dealership.

  • h

  • Amounts specified as Holdback on new vehicle invoiced to the dealership. Amount of the holdback is some percentage of the total price of the vehicle and optional equipment. Holdback should be booked as a receivable from the factory. Holdback amounts due the dealership from the factory are paid to the dealer annually, semi-annually or quarterly depending on firm and plan selected by dealer. Holdback is common on domestic lines and some imported lines.

  • i

  • A system under which cash from a fixed-amount fund or account is disbursed and periodically restored through reimbursements equal to the sums expended.
  • An amount that is usually given to the dealer from the manufacturer and may be passed along to the customer in the form of cash down or a discount.
  • Expenses of a general nature not directly applicable to an operating department(s). See Administrative Expense.
  • A repair order for service, repairs, or added options for a vehicle that is in a dealer's inventory. The repair order billing is paid by the dealership from one or more department accounts.
  • Goods and services used by and/or billed to a department of the dealership. Sometimes referred to as interdepartmental sales. These would appear as new vehicle pre-delivery expense, policy adjustment new and used vehicle, policy adjustment parts and service, used vehicle reconditioning, demo or company car expense.
  • Accounting adjustment to inventory accounts to reflect changes in value caused by obsolescence, changes in market value or other variations between book and physical inventory. Usually applies to the inventory value of used vehicles, parts and accessories and labor (Work in Process).
  • An estimate of the number of days it would take to sell current stock based on the current daily rate of unit sales. Calculated on a working-day-month as in this example: Average daily unit sales for last month (25 working days), 2 units. Present inventory, 30 units. Therefore, days' supply, in units, is 15 days. See Turnover Rate.
  • The factory assigned cost of a vehicle including holdback, advertising fees, and transportation costs. An "invoice" is sent with each vehicle from the factory listing all specifications and factory installed equipment on the vehicle.

  • j

  • (Source/Application Codes) Books of original entry used to record transactions in detail before their subsequent posting to the general ledger.

  • l

  • The retail price of labor, usually indexed to a unit of time.
  • The cost of mechanical or body shop labor to a dealership, usually indexed to a unit of time.
  • The hourly dollar rate charged by dealership for services performed by mechanical and body technicians. Usually varies by technician or operation skill level and type of operation (car/truck, internal/customer, mechanical/body). Is multiplied by Flat Rate (Labor) Time to determine labor charge for a service operation. Customer rate is sometimes called "Door Rate."
  • A method of inventory valuation that assumes the goods sold in any period are those most recently acquired, and the goods on hand at the end of the period are considered to have been in inventory the longest.
  • A method of inventory valuation that assumes the goods sold in any period are those most recently acquired, and the goods on hand at the end of the period are considered to have been in inventory the longest.
  • Permanent improvements, additions or renovation to facilities leased by a dealership and which, by law, become property of the facility owners. Balance of lease period usually determines the accounting depreciation rate used by dealership to "write off" the cost of the improvements. Leasehold Improvements are a Fixed Asset of the dealership.
  • The accounting record of final entry. There is a ledger (page/sheet) for each numbered account onto which are recorded Debits and Credits to that account. The E.O.M. amount of each ledger is the amount in that account which ends up on the Balance Sheet or Operating Statement.
  • All amounts owed by a business. They may be current, non-current or accrued.
  • The financial institution who "holds title" to the vehicle until the final payment has been made by the customer. Banks, Savings and Loans, Credit Unions, and Thrift Lenders are typical lienholders in the automotive industry.
  • Dealers who have elected to utilize the LIFO method of reporting inventory values should establish separate general ledger accounts captioned LIFO Reserve for each inventory account affected by LIFO.
  • An additional Fee added to the Base Monthly Payment which usually covers the cost of property taxes.
  • Amounts owed, by a business, which are due and payable over a period of time extending beyond one year from the date of the Balance Sheet. These amounts are usually represented by formal contracts such as notes, mortgages, and bonds.

  • m

  • The list price, determined by the manufacturer, of a vehicle. Factors such as markup, get ready fees, additional equipment installed, and other variables will increase the MSRP to the dealer's asking price for the vehicle.
  • The list price, determined by the manufacturer, of a vehicle. Factors such as markup, get ready fees, additional equipment installed, and other variables will increase the MSRP to the dealer's asking price for the vehicle.
  • The manufacturer's invoice cost less shipping charges, holdback, and advertising fees.
  • Month
  • The last day of the month for vehicle sales to be posted to the accounting department books. This day may vary from each dealership depending on their accounting practices.
  • Obligations of a business secured by liens on real properties, such as land, buildings, and equipment owned by the business.
  • Multiple Point

  • n

  • The sum (usually month-end) of Additions to Income and Deductions From Income so only a single (Net) amount is entered on the Statement as a non-operating adjustment to the dealership's Operating Profit or Loss for the month.
  • Term generally used in reference to the Book Value of an asset minus any liability against that asset.
  • Fixed Net Loss plus Net Additions and Deductions.
  • Total cost of the vehicle to the Lessee; the Gross Capitalized Cost less the Capitalized Cost Reduction; may include other items such as the Acquisition Fee, Warranties, etc.
  • Sum of Cash + Finance Contracts +Marketable Securities + Accounts Receivable New Vehicle + Vehicle Holdback + New Car, Truck, Demo & Used Vehicles CPO Inventories LESS Notes Payable New Vehicle & DEMOS, Overdrafts/Lines of Credit, Customer Deposits & Customer Accommodations-SVC Contracts/Rep Refund. (Total should exceed an average month's total expense).
  • Corporation: capital stock, plus retained earnings, less dividends declared. Partnership or proprietorship: investment less drawing. Remaining investment.
  • The cost of a vehicle less hold back.
  • Total overhead expense, less total parts and service gross. Indicates the costs which must be covered by new and used variable gross to break even on overall dealership operations. Overhead Expenses not absorbed by Parts and Service Gross.
  • Total overhead expense, less total parts and service gross. Indicates the costs which must be covered by new and used variable gross to break even on overall dealership operations. Overhead Expenses not absorbed by Parts and Service Gross.
  • Gross profit plus other operating income less operating expenses plus or minus the net of incidental or miscellaneous income and deductions other than income taxes.
  • Sales exclusive of (net of) sales and use tax and after all returns, discounts and other allowances.
  • The difference between the amount "Allowed" (trade allowance) for a trade-in and the amount owed on a trade (payoff).
  • Total current assets plus LIFO reserve less total current liabilities equals actual working capital. .
  • This is the dollar value of dealership's Net Working Capital determined necessary to sustain the level of operations of the dealership envisioned in the contractual agreement between the dealership and manufacturer. Many manufacturers recompute the "standard" periodically based on the dealership's actual operating practices. The guide calculation is based on the dealer's operating practices for non-cash accounts, plus an average month expense supply of cash.
  • Net investment plus profit year-to-date after taxes or excess of total assets over total liabilities. For LIFO dealers, add one-half of the LIFO reserve to net investment. Owner's equity in business.
  • Inventory of new cars, trucks, and demonstrators, less notes payable new vehicles and demos. Guide: Should equal 100% equity.
  • A contract that contains no guarantee from the dealership. If the customer defaults on the loan, the lender would repossess the vehicle.
  • Financing in which the lending institution is responsible if the customer defaults on the payments.
  • Obligations of a business (e.g. liabilities to banks and other creditors) evidenced by a promissory note.
  • Amounts owed by others (e.g. customers) to the dealership evidenced by a promissory note.

  • o

  • A dealership department which is treated as a profit center in the dealership accounting system; a department which makes sales, generates gross profit and is charged with all or a portion of certain expenses.
  • Comprised of the total of Net Working Capital, Leasehold Improvements, Machinery and Equipment, Furniture and Fixtures, Company Vehicles, Other Depreciable Assets (less all related depreciation) and total Other Assets (less investments and advances and lease vehicle liability).
  • Profit from operations. Total sales, less total cost of sales, less total expenses, but before the application of Additions to Income, Deductions from Income, certain bonuses and income taxes. This represents the profit derived directly from the "normal operation" of the dealership departments.
  • Profit from operations. Total sales, less total cost of sales, less total expenses, but before the application of Additions to Income, Deductions from Income, certain bonuses and income taxes. This represents the profit derived directly from the "normal operation" of the dealership departments.
  • Those assets consisting of certain receivables, items of an investment nature or other items of value which are owned by the dealership but which are not expected to be converted into cash in a short period of time and items not used regularly in the operation of the dealership.
  • A financial contract violation resulting from the dealership's failure to promptly pay-off the wholesale finance (Floor Plan) loan liability at the time a dealership sells or otherwise uses the vehicle which is collateral for that loan.
  • A financial contract violation resulting from the dealership's failure to promptly pay-off the wholesale finance (Floor Plan) loan liability at the time a dealership sells or otherwise uses the vehicle which is collateral for that loan.
  • Semi-fixed expenses (new and used) plus parts and service expenses plus fixed expense and dealer salary. Expenses that do not vary directly with volume.
  • Overhead Expense
  • Total investment owners have provided to the business and the cumulative earnings or losses that have not been distributed to the owners.

  • p

  • Parts inventory divided by average month's cost of parts sales equals parts inventory month's supply. Parts cost of sales=total parts sales less other merchandise sales less grosses for wholesale and shop jobbing incentives, other merchandise, discounts earned, and inventory adjustment. Guide: 2 ½ month's supply for large dealers to 4 ½ month's supply for smaller dealers.
  • The amount of money still owed to the customer's financing or leasing source for a trade-in vehicle.
  • A payment plan which allows payments to be made weekly, bi-weekly, semi-monthly, mirroring a person's payroll check.
  • The portion of the sale price which is Gross Profit. Divide the Gross Profits by related Sales account amount and convert to percentage.
  • A relatively small amount of cash on hand used for minor disbursements, which is usually maintained on a loaned basis.
  • Actually inspecting, counting and/or measuring goods and labor in inventory (on hand). Usually done at the end of an accounting period to verify or adjust Book Inventory.
  • Per New Car Sold
  • Per New Truck Sold
  • Abbreviation for "Per New Vehicle (Sold)".
  • Abbreviation for "Per New Vehicle Retailed".
  • Method of reducing or eliminating the price paid by the customer or dealership department for goods and/or services received when such concession or price adjustment is not granted by contractual agreement (warranty) or as trade discount, but granted as a "policy of good business practice". Some standard accounting systems carry a second "policy" account titled "Customer Goodwill".
  • Routine bookkeeping procedure of transferring the debit and credit amounts from Journals to the Ledgers.
  • Payments made in advance of the receipt or utilization of goods or services and which usually represent either items to be consumed in the conduct of business or items the benefits of which will be derived over a period of time.
  • Program
  • Vehicles used by a manufacturer or sold/leased by a manufacturer and then returned to or sold back to the manufacturer under terms of a promotional "program". Often offered to dealers at closed auctions.
  • The process of allocating a dealership's Indirect (Administrative) Expenses to the dealership's Operating Departments on some basis selected by the Dealer Principal.
  • Per Used Car Retail
  • Per Used Truck Retail
  • Per Used Vehicle Wholesale
  • Planning Volume

  • r

  • Rebates
  • Mechanical repairs and appearance work performed on used vehicles to place them in marketable condition.
  • The amount of money involved in restoring a trade-in vehicle to a sellable condition. Restoring includes engine work, body work, interior cleaning, replacing worn parts, etc.
  • Financing in which the dealership is responsible to the lender if the customer defaults on the payments and will buy the vehicle back from the lender.
  • Region
  • The federal law establishing standard disclosures on contracts, revealing the true cost of financing.
  • Registrations
  • Subgroup of dealership Fixed Expenses. Selected dealership occupancy costs and expenses. Includes amount "written off" as depreciation of facilities or improvements.
  • Cost of owning or leasing dealership facilities per new vehicle delivered. Useful when preparing the Dealership Annual Business Plan or analyzing an operation. Total of Rent and Rent Equivalent divided by the new vehicle volume (planned or actual as applicable).
  • A document used to record repairs and services performed on a vehicle. The repair order may be paid by the customer, internal departments, extended service contracts carriers, or by the manufacturer warranty.
  • A document used to record repairs and services performed on a vehicle. The repair order may be paid by the customer, internal departments, extended service contracts carriers, or by the manufacturer warranty.
  • Vehicles reclaimed from customers who have defaulted on their finance contract.
  • Retail
  • The undistributed cumulative profits and losses of a corporation from the time of formation, which are retained for use in the business.
  • Ratio of pretax profit to investment. Expressed as a percentage for a given accounting period. Computed by dividing the pretax net profit for the period by the Net Worth at the start of that period. Should be annualized with computed for less than 12 months.
  • Net profit before income tax, annualized, divided by operating investment. (Working capital plus net equipment (cost less depreciation) plus finance receivables deferred-net.) Return on actual amount of business capital.
  • Ratio of pretax profit to net sales. Expressed as a percentage for a given accounting period.
  • Refund
  • Retail
  • Remarketed Vehicles
  • Dealer Reported Sales

  • s

  • The amount charged for products (merchandise or services) sold to customers in the normal course of business.
  • Supporting set of calculations which show how figures on a financial statement (or tax return) were determined.
  • Total departmental (new or used) gross less total variable and total semi-fixed expenses. Department operating profit before allocation of fixed expense.
  • Semi-fixed Sales Expense
  • Operating expenses which vary with, but not in direct proportion to, sales volume. This is a sub-group of Total Overhead Expenses.
  • Total parts, service and body shop gross profits divided by the sum of total fixed expenses, parts, service & body shop sales expense and dealer's salary. Guide: Benchmark is 70% - 100%.
  • Sales
  • Salesperson
  • A statement which lists the results of business operations for a particular accounting period (e.g. month and year-to-date).
  • Irregular or unusual repair operation which is not included in Labor Time Guide, or the additional time required to perform a regular operation for reason(s) beyond control of the dealership.
  • To have work performed by outside vendors.
  • Services or repairs on a vehicle that are performed at a business outside of the dealership, but were provided through the dealership. An example would be the installation of a radio or car phone by a third party vendor.
  • A book containing a group of detail accounts, the total amounts of which agree with the balance of a control account in the general ledger.

  • t

  • Net cash + Marketable Securities and 50% of Used Vehicle inventory, less customer recommendations for service contracts/Repo refunds. Guide: Over 200% of average month expenses.
  • Net cash + Marketable Securities and 50% of Used Vehicle inventory, less customer recommendations for service contracts/Repo refunds. Guide: Over 200% of average month expenses.
  • Amount dealer agrees to give for the trade-in vehicle.
  • A listing of all account balances in which the total of the debit amounts is equal to the total of the credit amounts.
  • Number of times and inventory is (figuratively) changed or "turned" in a given period. Formula: Total number of items (dollars at cost) handled during the period divided by average inventory during the period (at cost). The term can be appplied to personnel, i.e., "Salesperson Turnover." In Parts Department this is Gross Turns.

  • u

  • Used Car
  • Amount paid to Mechanical Service and Body Service technicians which has not been accounted for as productive labor on repair orders, earned vacation time, or charged as building or equipment maintenance. Might represent idle or lost time not properly accounted but usually indicates other problems or irregularities. Computed by subtracting the end-of-month Work in Process-Labor physical inventory from end-of-month Work in Process Labor book inventory. Also called "Adjustment-Cost of Labor Sales". Displayed on Operating Statement as an increase in cost of sale, decrease of Gross Profit and no sales. If computations produce an increase of Gross Profit, there is still cause for concern.
  • Number of vehicles currently in operation in a given market area. Includes ten model years of Ford vehicles (also L-M if a dual dealer) that were registered as of July 1 of the previous year.
  • Number of vehicles currently in operation in a given market area. Includes ten model years of Ford vehicles (also L-M if a dual dealer) that were registered as of July 1 of the previous year.
  • Cost of sales during a 30-day period, divided by number of working days equals daily rate cost of sales. Inventory dollars, divided by daily rate cost of sales equals daily rate cost of sales. Inventory dollars, divided by daily rate cost of sales equals dollar day's supply of inventory. Guide: 30 days
  • Number of used vehicles sold during a 30-day period, divided by number of selling days equals daily sales rate. Number of used vehicles in inventory, divided by daily sales rate equals day's supply. Guide: 30 days
  • Used Truck

  • v

  • Variable Sales Expense
  • Total new and used car and truck gross plus total new and used finance, Insurance and ESP income less new and used Repo loss, less new and used variable sales expense. Vehicle gross remaining after variable sale expense.
  • Generally, the combined gross profits of the New and Used Vehicle Departments, Lease and Rental Department and F&I income.
  • The Variable Gross Profit less Variable Selling Expenses. Called Vehicle Sales Profit or Vehicle Net by some manufacturers.
  • Variable Net Profit divided by number of new vehicles sold. If divisor is retail sales only, then result is P.N.V.R.
  • Vehicle sales, F&I and leasing operations of the dealership. Called "variable" because of volume (and profits) short-term sensitivity to seasonal and economic fluctuations.
  • Group. Operating expenses which are directly related to vehicle sales and leasing and tend to vary in direct proportion to volume. Some Dealership Standard Accounting Systems include Vehicle Advertising and/or Floor Plan expenses in this expense group.
  • Total profit made on all front end items, including the sale of the vehicle and any hard adds and any adjustments for any under or over allowances on trade-ins.
  • The number issued by the factory to identify the vehicle. Included in the VIN is the make, model, type, year manufactured, etc.
  • The number issued by the factory to identify the vehicle. Included in the VIN is the make, model, type, year manufactured, etc.

  • w

  • An amount credited by the factory to a dealership's open account with the factory. The amount is equal to the dealership's average monthly (or biweekly) claims against the factory for the prior year. Previous year's credit is withdrawn as new credit is entered.
  • In-depth investigation and evaluation of a dealership's compliance with all aspects of the manufacturer's warranty policies and procedures. Audits are conducted selectively by designated personnel usually from factory central office staff and frequently result in charge-backs to dealership. Charge-backs may be regulated by state franchise law.
  • Sale of parts and service chargeable to the factory under the warranty claims provision of the Dealer Selling Agreement.
  • A record detailing the total gross profit derived from a new vehicle sale (or sale of used vehicle purchased by dealership) and all trade-ins resulting from that sale. D.S.A. 542
  • Wholesale
  • Cost of labor performed by a technician, claimed on the technician's time card (report), and "flagged" on a repair order, but not yet processed on a Service Sales Summary or Journal. A Current Asset. An inventory item.
  • Assets which are in some ways similar to Current Assets and are also, to some degree, similar to Fixed Assets. Lease and Rental Vehicles and Driver Training Vehicles are Working Assets in some Dealer Standard Accounting Systems. Some franchisers add Working Assets to Current Assets when computing Dealership Working Capital.
  • Total current assets plus LIFO reserve less total current liabilities equals actual working capital.
  • Total current assets plus LIFO reserve less total current liabilities equals actual working capital.

  • z

  • Sales Zone