"Create Value to reduce suffering and restore human flourishing"
Incorrect password — please try again.
🔒 Confidential · Authorized recipients only
Prosynergy
Bookkeeping that creates value
May 2026 · Monthly Financial Review
May 2026 Insights for Shertzer Equipment Group
Prepared by Karan · Prosynergy Bookkeeping
Video Walkthrough
Key Metrics — May 2026
Revenue
$878,703
↑ +$163,795 (+22.9%) vs April
4-month avg: $797,701
Net Income
$189,712
↑ +$79,603 (+72.3%) vs April
4-month avg: $102,720
Cash in Bank
$27,740
↑ +$11,899 (+75.1%) vs April
+ $52,200 undeposited funds
Profit Quality Score
0.55
⚠ Below target range (0.8–1.2)
55¢ per $1 converted to cash
The Month in One Sentence
"May 2026 was Shertzer Equipment Group's strongest month yet — gross margins hit 25.2% and net income surpassed $189K — but a stale $37,800 California receivable and inventory growth signal that converting wins to cash will be the defining challenge of summer."
Three Power Insights
Insight 01
Four Months of Straight Margin Improvement — This Is Real
Gross margin climbed from 10.3% in February to 25.2% in May — four straight months of improvement. Equipment purchase costs dropped from 83¢ to 69¢ per sales dollar. That's better buying, and it's compounding.
Action: Document which auctions and direct buys are producing the best margins — then repeat them deliberately heading into summer.
Insight 02
Philip Miller (CA) — $37,800 Sitting Idle for 91+ Days
One California customer — Philip Miller — holds 26% of total outstanding receivables and hasn't moved in over 91 days. At a 25% margin, collecting this is the cash equivalent of selling $150,000 worth of equipment.
Action: Send a formal demand letter with a 15-day deadline this week. If no response, evaluate collections referral or write-off before July close.
Insight 03
Net Income Soaring — But Only 55¢ Per Dollar Is Converting to Cash
May net income of $189,712 was nearly double the 4-month average — but only 55¢ of every dollar converted to operating cash. The gap isn't a problem: $69K went into yard inventory for summer and $244K paid down the Univest LOC. Both were intentional.
Action: Before the peak auction season, calibrate LOC paydown pace against your buying calendar. A slightly larger cash buffer now avoids costly emergency draws later.
P&L Summary — February through May 2026
Feb 2026
Mar 2026
Apr 2026
May 2026
4-Mo Avg
Revenue
$657,975
$939,216
$714,908
$878,703
$797,701
Cost of Goods Sold
$590,213
$796,342
$567,652
$656,887
$652,773
Gross Profit
$67,762
$142,874
$147,257
$221,816
$144,927
Gross Margin %
10.3%
15.2%
20.6%
25.2%
17.8%
Operating Expenses
Subcontractor Labor
$2,722
$35,658
$5,686
$4,367
$12,108
Owner's Compensation
$9,000
$9,000
$9,000
$9,000
$9,000
Advertising
$3,561
$5,980
$3,935
$4,053
$4,382
Interest Paid
$5,039
$6,070
$5,285
$7,176
$5,893
Occupancy
$5,476
$3,036
$4,018
$2,508
$3,760
All Other Expenses
$6,585
$7,237
$10,682
$5,000
$7,376
Total Expenses
$32,383
$66,981
$38,606
$32,104
$42,519
Net Operating Income
$35,379
$75,893
$108,650
$189,712
$102,409
Net Income
$35,379
$75,681
$110,109
$189,712
$102,720
Net Margin %
5.4%
8.1%
15.4%
21.6%
12.6%
Revenue & Net Profit — Month over Month
Revenue (left axis)
Net Profit (right axis)
Cash Flow Waterfall — May 2026
What This Means
Revenue +$879K
Equipment sales at $878,703 — 10% above the 4-month average. Strong demand across the region.
A/P Deferred +$171K
Martin's Auction A/P built to $206K at month-end — normal for an auction buyer. Paid in full within three days of June 1.
LOC & Inventory −$302K
$244K removed from the Univest revolving line + $69K added to yard inventory for summer. Both deliberate moves.
Loan Payments −$40K
$35K to Wendell & Twilene (now $105K, down from $292K in February) + $5,197 regular Univest payment.
Ending Cash $79,940
$27,740 in bank + $52,200 undeposited funds at May 31. The undeposited balance cleared to the bank within 3 days of June.
Key Accounts Snapshot
A/R Outstanding
$101,705
DSO: 3.5 days · 91+ bucket: $40,011
↓ −$45,006 from April 🟢
A/P — Trade
$238,347
DPO: 10.9 days · Paid in full by June 3
↑ +$171,127 from April
Univest LOC 8835
$298,873
Revolving inventory line of credit
↓ −$244,133 from April 🟢
BB&T LOC 5998
$185,650
Revolving credit line
→ Unchanged from April
L/P Wendell & Twilene
$105,000
Down from $292,700 in February
↓ −$35,000 from April 🟢
Univest Term Loan 5866
$121,625
Regular monthly payment ~$5,198
↓ −$5,197 from April 🟢
⚠ Watch Items:
Philip Miller (CA) $37,800 in 91+ days A/R — owner contacted, resolution expected by next close. |
L/P Elvin & Martha Shertzer: $60,000 — unchanged. |
Capital One Spark Visa: $28,781 (↑ +$10,489 from April).
Financial Health Ratios
Current Ratio
3.60
$3.60 in assets for every $1 of current obligations. Inventory-heavy but robust.
Quick Ratio
0.24
Without inventory, liquid assets cover only 24¢ per $1 owed. The revolving LOC is the liquidity backstop — by design for this model.
Debt Service Coverage
4.72×
Operating income covers all debt payments nearly 5× over. Well above the 1.25× minimum.
Debt-to-Equity
0.46
46¢ of debt per $1 of equity. Conservative leverage for an equipment dealer — and improving every month.
Before Next Month
⚑ Before Next Month
The Event
The Wendell & Twilene loan has been paid down from $292,700 in February to $105,000 in May. At current pace, full retirement is achievable in June or July.
Estimated Impact
Eliminating this loan frees $35,000+ per month permanently — meaningful liquidity heading into Q3 alongside the accelerating margin improvement.
One Action Item
Confirm payoff plan and final payment date with Wendell by June 20 — then model the freed cash against summer auction purchases before committing to large bids.
Prepared by Prosynergy Bookkeeping from QuickBooks Online data. Accrual basis, period ending May 31, 2026. For internal management use only — not financial, tax, or legal advice.