Breaking Down The PIA Ratios --Dickeson

If you're a printing company with publicly held stock being traded on the open market you love Net Profits. They get converted to EBITDA and then multiplied by a P/E ratio to give you that lovely on-paper-millionaire feeling as you drive around in your leased Jaguar.

Now where are we in our annual rites of spring? Do we toss our PIA Ratios Studies in the trash? I wouldn't. They're all we've got. Some time ago, PIA and Margolis shifted to an emphasis on VA—Value Added. Very smart move. Value Added is sales less material, including buy-outs. It was a smart move, but PIA and Margolis apparently overlook just how canny they were by reporting both sales and materials to arrive at Value Added. Deduct materials from sales and all of the rest of the costs are the expenses of conversion—converting raw materials to printed products.