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Fiscal Fitness of Your Company: The Z-Score

Posted Wednesday, March 18, 2015 by Stuart Margolis, CPA, MT Margolis Partners LLC.

Interested in learning where you stand? Participate in the Ratio Studies today!

Recently, a lending institution asked a company owner for the company’s “Z-Score”. Perplexed by the request, the owner called us for a calculation. Here is scoop on the Z-Score.

The Z-Score was developed in the 1960’s by Edward I. Altman, a business professor at New York University. Dr. Altman researched many companies that had gone bankrupt, and others that were thriving. He eventually focused on five key financial ratios as determinants of financial success. He assigned a weight to each of the five, multiplying each ratio by a weighted number to indicate the relative importance he derived through research and practice. The sum of the weighted ratios is the Z-Score. Like many other ratios, the Z-Score is an indicator that can be used to see how your company is doing on its own, and how it compares to others in your industry. It is common for banks and investors to use the Z-Score to determine fiscal fitness.

The Z-Score takes into account 8 variables from a company’s financial statements:

alt textThe 8 variables are used to comprise the following 5 Ratios. The chart below also shows the weight assigned to each Ratio in determination of Z-Score.

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To derive your Z-Score the calculation is:

Z Score =EBIT/Total Assets(3.3) + Net Sales/Total Assets (0.99) + Market Value of Equity/Total Liabilities (0.6) + Working Capital/Total Assets (1.2) + Retained Earnings/Total Assets (1.4)

Our Example firm created the follow Z-Score:

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Interpretation of Z-Score:alt text

Our example firm resulted in a factor of 1.87 and fell into the “Could be a chance of the company heading towards bankruptcy within 2 years of operations from the date of financial figures given.” In reality, they fell towards the bottom range of this category. This particular company was sold, instead of moving into bankruptcy, almost 2 years after these results received!

In recent years, we’ve helped companies with less than favorable Z-Scores turn around and thrive. If you are in trouble call and get help.

About Margolis Partners

Margolis Partners have long been recognized as the financial experts for privately-held businesses with a specialty in print and packaging, assisting companies with strategic and financial management, valuation, mergers/acquisitions, accounting, audit and tax services. The firm is noted for its expertise in enabling companies to optimize profits. Proudly, it is the purveyor of the industry’s Value-Added Principles of Management, and compiles the annual Printing Industries of America Ratios, the printing industry’s premier financial benchmarking tool.

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OSHA & First Aid Supplies - What you need to know

Posted Monday, March 9, 2015 by Leslie Kipnis.

From PPI Partner G&K Services

Did you know that according to OSHA 1910.151 workplaces should have adequate first aid supplies stored in an area where they are readily available for emergency access? In an effort to help businesses protect their employees and meet regulatory requirements, G&K Services is now offering a first aid program to all customers in the US. All of G&K’s first aid cabinet solutions either meet or exceed OSHA regulations and contain all ten items required to meet ANSI standards. G&K’s unique first aid solutions dispense supplies one at a time, controlling excess usage and overstocking costs. Customers can expect predictable billing with a simple weekly flat rate. This program is backed by G&K Services’ customer promise and commitment to service excellence with a G&K representative regularly servicing the first aid cabinets, to make sure they remain fully stocked. Other new products include portable first aid kits, ideal for use in vehicles, blood borne pathogen kits, and a first responder eye wash station.

OSHA 1910.151 can be viewed in its entirety at OSHA.GOV.

To learn more about this cost-effective and fully managed solution visit


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How ARE You Doing?

Posted Tuesday, March 3, 2015 by Jules VanSant.

alt textIt’s a common greeting when you meet a person, but what’s your response when your banker asks the same question? And if you say, “I’m in the black” – what does that really mean? The answer is meaningless without some form of benchmarking – and that’s where the PIA Ratio Studies can help.

The Ratio Studies have been published for nearly 100 years and provide participants with data they cannot get anywhere else! The Ratios help define what a successful firm’s operating statement and balance sheet looks like. How? By publishing ratios of the top performers (Profit Leaders) in contrast with all other participating firms (within a market segment). As a company manager, this information is invaluable in helping you reach your company’s maximum potential.

Because gathering data is key to the success of this program, by sharing your company data (through the accounting firm Margolis Partners LLC), there is no cost to receive the survey results! If your chart of accounts is extremely different than the survey, for $150 (less than your CPA would charge), you can have the data entered for you — CONFIDENTIALLY! Although firms have different product mixes as well as capital equipment, this year’s survey will accommodate those differences as will the final report shared with participating companies.

So why aren’t you participating? This year’s deadline to submit your information is May 15, 2015 and while you’re prepping your taxes… just sayin’.

Need more information? Give us a call at PPI OR join me at the free webinar 3/19 and ask questions! REGISTER HERE

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Our Changing Workforce

Posted Tuesday, February 17, 2015 by Joe Polanco.

alt textIf you were to walk into the production areas of several printers anywhere in North America, you would undoubtedly observe something they all have in common. No, it’s not the equipment. Nor is it the facility design. It’s the average age of their employees. Look at the press operators. The skilled bindery technicians, and yes, even the prepress techs. Odds are you won’t see many under 30, or for that matter under 45.

How did this happen – and more importantly – what does this mean for our future? Regardless of what the “tekkies” are saying, digital print is not going to replace all of our offset presses, and inline finishing isn’t going to replace our needs to bind and finish offline.

The printing industry has always been a craft industry. One learned through a formal apprenticeship (when there were trade unions) or on‐the‐job (OJT) under the tutelage of someone more knowledgeable. Many would begin in small job shops operating single color duplicators/presses or simple bindery equipment and then make job hops for the opportunities to operate more complex equipment and hone the skills necessary to be called a Craftsman.

The apprenticeship programs, as well as many of the high school and trade programs, which fed the industry are long gone. The duplicator press, which was the genesis of their journey as a press operator, is hardly ever found in print shops. The job shop has been replaced with a broad range of print providers – all running digital equipment.

Another complication was that the industry workforce took a dramatic hit in the Big Recession, which was acerbated by the move to digital‐based communications. There was no reason to hire new people and anyone with sub‐standard skills was let go. We went through nearly 5 years of limited hiring in the pressroom and bindery. Anyone who had been laid off in 2007 or 2008 quickly determined that their future no longer existed in our industry. The result being we no longer had the “reserve” labor pool thatin prior business cycles was always available.

To confound matters, many outside of the industry, and for that matter too many inside the industry, were forecasting the death of everything print. Anyone who understood the craft of print and was employed was not too excited about leaving their present job, especially in light of a rapidly shrinking industry where closures and consolidations were occurring at historical rates. AND young people had no interest to get into a “dying” industry.

That’s how we got here.

The major challenge facing the industry over the next 10 years is not technology and marketing, but finding and training people. A recent study conducted by several Printing Industries of America Affiliates asked the question: What percentage of your skilled workforce (Production Personnel) do you estimate will retire in the next 5‐10 years? Over 50% of the respondents indicated that a significant amount (30‐50%) of their workforce would retire in that period. The same survey showed that the median age in the offset pressroom was over 45 in nearly 2/3 of the companies surveyed.

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A crucial question is where will we find people with the right skills (attitude, ability, and work habits) to replace our existing workforce? More importantly ‐‐ how will we train them? The industry predominately uses OJT to train (85% per the PIA Affiliate survey); consequently the industry’s “trainers” will very quickly be departing the industry. By the way, our industry is not the only one facing this challenge. Many firms in the manufacturing sector are seeing identical issues. The baby‐boomer who comprise a large sub‐set of skilled employees are beginning to leave and changes in technology and workflow are making them look beyond their competitors for personnel. We’re not alone.

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What’s the answer? It’s a recommitment to training.

In the past management relied on labor unions and trade schools to develop a core of trained individuals. That is no longer an option. Equipment manufacturers no longer have the depth in their organizations to provide training as they did in the past, and the trade associations don’t have resources to create print schools, which historically were supported by public dollars.

Yet, if all of these groups work together there is hope. Industry organizations can be the fulcrum that can leverage spreading the word to educational institutions that the industry still needs young people.Employers need to recommit their efforts (and $$) to create OJT programs that can quickly develop the skill sets needed in today’s world of print and technology. A variety of tools already exist to support training in the pressroom and bindery (Printing Industries of America’s Training Curriculums) and there are vehicles which measure and benchmark an individual’s skills (National Council of Print IndustryCertification). Industry manufacturers and industry associations can partner to find ways to recruit “graying” industry trainers who don’t want to retire at the golf course but find ways to give‐back to an industry many dearly love.

All it takes is a bit of creativity, a few dollars, and a commitment that print is still a viable industry.

Joe Polanco is a product of industry trade schools and developed a passion for all things print decades ago. He began his career as a press operator, earned a printing management degree, and has held various management positions within the industry. He presently serves as the president of the Printing & Imaging Association of MidAmerica, a regional trade association affiliated with Printing Industries of America.

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The Top 10 Productivity Killers

Posted Tuesday, February 10, 2015 by Jules VanSant.

alt textLet’s face it - ha! It’s true that the amount of distractions we face today are far greater than any generation prior. We’re expected to respond quickly when addressed, be at the meeting and stay focused, engage electronically as well as personally - it sometimes feels like being on a roller coaster that never ends. It’s important to honor people’s ability to manage their time, respect they will follow through and perform as expected for the position they hold, yet….

It’s NOT always that easy…sometimes it feels like a puppy must - TREAT * BALL * PLAY * WALK * RUB MY BELLY … where where where where?!?!?!?! It’s hard to get away from it all and yet perform as expected.

Us humans take tangents and get caught up in non-productive distractions when searching, chatting, or interacting LIVE (yes, it’s not all about the internet). Try searching “Selfie” on the internet… ok don’t. What people will post up?!?! OMG.

Sorry, I got distracted…

Here’s a list of the latest & greatest TOP 10 Productivity Killers to keep an eye on and make your employees aware of from a recent survey. Harris Poll, on behalf of, surveyed 2,138 hiring managers and human resource professionals in a number of industries. They found behaviors of co-workers, meetings and a number of other factors are also creating obstacles to maximizing performance.

  1. Cell phone / texting: One in four workers admitted that during the typical workday they will spend one hour on personal calls, emails and/or sending text messages.
  2. Gossip: That chattering the office may not always be about work.
  3. The internet: 20% of workers said they spend an hour or more at work searching the NET for non-work-related information.
  4. Social Media: Studies have found that Facebook, LinkedIn and Instagram are significant drains on employee time.
  5. Snack breaks / Smoke breaks.
  6. Noisy co-workers: these are people who have conversations that are too loud while on the phone, or who make outbursts when they get annoyed or upset.
  7. Meetings: Some firms just have too many meetings, and a lot of time is wasted if they are not succinct and to the point.
  8. E-Mail: Employees are sometimes busy sending personal e-mails to friends.
  9. Co-workers dropping by: These are those little chat sessions when a colleague stops by another’s desk for me chit chat.
  10. Putting calls on speaker phone.

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