Business Resource Services

General Tool L Equipment Rental Companies
Executive Summary

This executive summary describes operating results for general tool equipment rental companies for these critical areas:

profitability – efficiently generating gross profits, net profits and managing expenses
productivity – efficiently managing staff and rental equipment
financial position – efficiently using assets and managing debt
cash flow – efficiently managing working capital

The analysis presented here is based on information presented on the three basic tables at Appendix B. Only 10 companies reported earning 90% to100% of their rental income from general tool equipment and only 24 reported in the 60% to 89% category. Due to this low number of responses, results for the top 25% are not presented as they may be misleading.

This chart shows the effect of direct cost management for general tool rental companies. Direct costs include depreciation on rental equipment, costs of merchandise and equipment sold, sub-rental expense and maintenance, and lease payments on rental equipment.

A company’s targeted gross margin should be based on a targeted mix of revenues (merchandise sales and rental income per the related discussion at page 9). The following chart shows how the revenue sources for the top 25% compare to all companies within each of the respective general tool rental categories.