Monthly Benchmark Tracking · Confidential

Financial Benchmark Analysis — Edition 01 (Baseline)

Edition 01 of seriesBaseline FY 2025 (Jan–Dec 2025)Reporting through Aug 2026 (latest complete month)Classification basis H40a9b636

SuiteStep, LLC — Parent Company (Consolidated: Parent, Subsidiary 1, Subsidiary 2; xElim) · Prepared 3 Sep 2026 · Preparer: Sonar AI for Tim Dietrich (Administrator) · History file: benchmark_tracking_history.json (File Cabinet id 91609) · Prior edition: none

SECTION 01

Executive Summary

Thesis: a profitable, un-levered, cash-rich business whose margin advantage against peers is indeterminate once classification policy is accounted for, and whose working capital has deteriorated materially through 2026 — though roughly half of the receivable ageing is bookkeeping residue rather than customer risk.

Favorable

Operating margin 11.0% FY25 → 14.7% YTD26, above the ~4–9% composite.
ROE 31.9% / ROA 25.5% FY25 with effectively zero debt.
Revenue +18.7% YoY (Jan–Aug); run-rate $13.4M.
Statements internally consistent: BS net income ties to P&L to the cent at both checkpoints.

Adverse

Cash conversion cycle 54.6 → 99.1 days across four snapshots; DIO 54.5 → 104.9.
Inventory +109% since Dec-25 against TTM COGS +8.6%.
$473K of customer-attributed A/R is >90 days (54% of that balance).
Liquidity ratios roughly double the norm — idle capital.

Observation

Gross margin is a 38–44% band, not a 38.1% point; overlaps the peer range, so no margin verdict is possible without a controller decision (Section 03).
58% of A/R ($1.23M) is unattributed to any customer — migration/opening-balance residue.
No income-tax provision; demo-dataset tells present.

Gross margin FY25

38.1%

Band 38.1–43.8% by policy · composite ~35–45% · indeterminate

Operating margin FY25

11.0%

Composite ~4–9% · YTD26 14.7%

Cash conversion cycle

99 days

Aug-26 TTM basis · baseline 55 · norm ~45–90

Inventory turns

3.5×

Aug-26 TTM · baseline 6.7× · norm ~4–8× (off-site stock not isolable)

DSO

63 days

26 days ex-unattributed residue · norm ~30–45

ROE FY25

31.9%

Composite ~12–20% · debt/equity 0.31×

SECTION 02

Revenue & Margin Trend

Monthly revenue and gross margin, Jan 2025 – Sep 2026

Source: Income Statement (report −200), consolidated, range=acctmonth; runs LFY and TFYTP verified by header. Sep 2026* is in progress and excluded from every trend statistic.

Measure	FY 2025	Jan–Aug 2026	Δ
Revenue	$10,836,925	$8,238,204	+18.7% vs Jan–Aug 2025 ($6,939,571)
Gross profit	$4,127,077	$3,293,093	GM 38.08% → 39.97%
Operating income	$1,188,527	$1,213,878	Margin 10.97% → 14.73%
Net income (pre-tax)	$1,163,833	$1,196,786	Margin 10.74% → 14.53%
Monthly GM dispersion (SD)	4.42 pts	2.27 pts	Range 33.0–49.6% → 37.9–45.6%

Finding E1-F4 · Margin spikesDecember 2025 gross margin printed 49.6% on revenue +11.3% and COGS −11.7% month-on-month; March 2026 printed 45.6%. Both are single-month excursions of >2 SD. The instance carries monthly opening-balance journals (see Section 08 caveats); these, rather than trading, are the probable driver. Latest three-month average revenue ($1,115,113) is 1.18× the prior twelve-month average ($942,839) — steady growth, below the 1.5× inflection threshold.

SECTION 03

Basis of Comparison

Before any ratio is set against a peer range, this section states what the ledger has placed above and below the gross-margin line, which of those placements a peer might reasonably make differently, and what that does to the margin. Where the ledger cannot answer the question, it says so.

(a) COGS account map — what the statement rolled into Cost of Sales

Account	Name	FY 2025	% of COGS	Jan–Aug 2026	% of COGS
5310	Purchases	$5,542,304	82.6%	$4,053,127	82.0%
5340	Cost of Sales	$552,758	8.2%	$450,090	9.1%
5360	3rd Party Contracting	$614,786	9.2%	$450,269	9.1%
5370	Stock Adjustment	—	—	($9,140)	(0.2%)
5205	Purchase Price Variance	—	—	$765	0.0%
Total Cost of Sales		$6,709,848	100%	$4,945,112	100%

Membership hash H40a9b636 (sorted account ids 55, 56, 201, 234, 3657). Defined in the chart of accounts but inactive in both periods: 5100/5110 Drop Ship COGS, the 5210–5290 variance family, 5320 Purchases Discounts, 5330 Purchases Returns, 5350 Overtime, 5900 Intercompany COGS. Two new COGS accounts (5370, 5205) first posted in 2026 — Edition 2 will treat any further membership change as a finding before computing deltas.

(b) Borderline accounts — policy-dependent placements on either side of the line

Account	Side here	FY 2025	Peer alternative	GM effect if moved	Status
5360 3rd Party Contracting	COGS	$614,786	Outsourced fulfilment / service delivery — often operating expense at peers	+5.67 pts	Resolvable by policy
5340 Cost of Sales	COGS	$552,758	Generic name; if it is service-delivery cost against 4310 Revenue – Services (7.1% of revenue), peers may show it below the line	+5.10 pts	Unclassified — confirm with controller
6210 Salaries & Wages	Opex (G&A)	$971,756	Distributors commonly charge warehouse / DC labour to COGS. This ledger has a single payroll account, so the DC share cannot be isolated	−8.97 pts (bound: all wages)	Unclassified — confirm with controller
6610 Rent Expense	Opex (G&A)	$150,040	DC occupancy sometimes in COGS	−1.38 pts (bound)	Resolvable by policy
8300 Freight Expense / 8200 Duty	Other Expense	$0 (YTD26: −$76)	Inbound freight and duty are COGS at most distributors — here they sit below operating income and are immaterial in the data	0.00 pts	Immaterial; placement noted
6080 Freight-out	Opex (Selling)	$0 (YTD26: −$30)	Sometimes netted in COGS or against 4450 Freight Revenue	0.00 pts	Immaterial

(c) Gross-margin sensitivity band

FY 2025 gross margin under alternative classification treatments

Solid bar: quantified band (reported 38.1% to 43.8% with 5360 moved to opex; 48.9% if 5340 also moved). Dashed: unquantifiable lower bound (all 6210 wages into COGS, 29.1%) shown for scale only — the true DC-labour share is unknown. Shaded: specialty-retail composite ~35–45%.

Finding E1-F3 · Margin variance is indeterminateThe quantified band (38.1–43.8%) sits inside and above the composite range, and the unquantified DC-labour question could move the figure the other way by several points. No conclusion about margin performance relative to peers is supportable until the controller confirms the treatment of 5360, 5340 and the DC share of 6210. This is the largest variance in the report that a policy difference alone could explain.

(d) Inventory scope

Turns denominator = 1210 Inventory in Stock ($2,095,796 at Aug-26) + 1220 Inventory Returned Not Credited ($150). Accounts 1215 Inventory In Transit and 1300 External Inventory In Transit exist but carry $0. The location list includes three off-site stock locations — 3PL (id 14), FBA (id 15) and In Transit (id 16) — all owned stock held elsewhere. The balance sheet does not split 1210 by location, so the off-site share could not be isolated from the statements. Direction of bias: a peer that does not carry 3PL/marketplace stock on its own balance sheet will show higher turns and lower DIO for the same operation; this business's 3.5× / 105 days should be read as a conservative comparison.

(e) Revenue scope

Revenue is gross product (92.9%) + services (7.1%) + freight revenue (0.05%) inside 4000 Sales. Contra accounts 4320 Sales Returns & Allowances ($282 YTD26) and 4520 Sales Discounts ($0) exist within Sales. Marketplace (FBA) fees are not visible as a distinct account — if netted into 5360 or 4210 they shift margin without a trace. Classification drift verdict: not applicable — baseline edition.

SECTION 04

Margin Quality (Costing Integrity)

Distinct from classification: this scan looks for credit balances inside Cost of Sales that mechanically inflate margin.

Measure	Reported	Indicative-adjusted	Adjustment
Gross margin, Jan–Aug 2026	39.97%	39.86%	5370 Stock Adjustment credit of $9,140 (Aug 2026) added back to COGS: ($3,293,093 − $9,140) / $8,238,204
Gross margin, FY 2025	38.08%	38.08%	No credit balances in COGS

Finding E1-F5 · Immaterial today, pattern worth watchingEffect is 0.11 pts — not a margin-quality problem at this scale. It is recorded because the account first posted in 2026, its first entry was a credit, and the Dec-25 / Mar-26 spikes (E1-F4) indicate the ledger can move margin by mechanisms other than trading. A costing review is recommended (Section 07, item 05).

SECTION 05

Benchmark Scorecard

Position against approximate sector composites

Shaded band = approximate industry range (blended specialty retail / consumer-goods wholesale distribution; Damodaran US sector composites and RMA-style norms, un-normalised). Marker = SuiteStep. Whiskers on gross margin = classification band (Section 03c); on DSO = 26.4 days ex-unattributed residue to 63.4 days as booked. Emerald only where favorable and outside classification noise.

Metric	SuiteStep	Approx. norm	Assessment
Gross margin (FY25)	38.1% · band 38.1–43.8%	35–45%	Indeterminate — within classification noise
Operating margin (FY25 / YTD26)	11.0% / 14.7%	4–9%	Favorable — survives the band (classification moves cost between lines, not out of operating income)
Net margin (FY25, pre-tax)	10.7%	3–7% after tax	Not comparable — no income-tax provision (E1-F7)
SG&A % revenue (FY25)	27.1%	25–35%	Within range, favorable end
Inventory turns (TTM Aug-26)	3.48×	4–8×	Unfavorable — principal finding (E1-F1); conservative given off-site stock
DIO	104.9 d	45–90 d	Unfavorable — principal finding
DSO	63.4 d (26.4 ex-residue)	30–45 d	Unfavorable as booked; favorable on customer-attributed basis (E1-F2)
DPO	69.3 d	30–45 d	Above range — vendor stretch flattering the CCC
Cash conversion cycle	99.1 d	45–90 d	Unfavorable; capital absorbed (DIO+DSO) 168 d
Current ratio	4.21×	1.5–2.5×	Above range — excess liquidity (E1-F6)
Quick ratio	2.92×	0.8–1.2×	Above range
ROE (FY25)	31.9%	12–20%	Favorable
ROA (FY25)	25.5%	5–10%	Favorable
Total liabilities / equity (Aug-26)	0.31×	0.5–1.5×	Under-levered; interest-bearing debt $2,000
A/R % of TTM revenue (Aug-26)	17.4%	8–12%	Unfavorable as booked (7.2% ex-residue)

SECTION 06

Working-Capital Trend

Basis: trailing-twelve-month revenue and COGS (from monthly Income Statement columns) against period-end balance-sheet balances. Held constant for all future editions.

Measure	Dec 2025 (baseline)	Mar 2026	Jun 2026	Aug 2026	Trend
TTM revenue	$10,836,925	$11,051,794	$11,584,369	$12,135,558	+12.0%
TTM COGS	$6,709,848	$6,656,608	$6,989,514	$7,289,704	+8.6%
Inventory	$1,001,084	$1,270,415	$1,813,926	$2,095,946	+109% — deteriorating
Inventory turns	6.70×	5.24×	3.85×	3.48×	Deteriorating each snapshot
DIO	54.5	69.7	94.7	104.9	Deteriorating
Trade receivables	$1,305,953	$1,545,536	$1,903,717	$2,108,405	+61%
DSO	44.0	51.0	60.0	63.4	Deteriorating
Capital absorbed (DIO+DSO)	98.4	120.7	154.7	168.4	Deteriorating
Trade payables	$806,803	$998,611	$1,343,372	$1,383,823	+72%
DPO	43.9	54.8	70.2	69.3	Vendor stretch — offsets, does not cure
Cash conversion cycle	54.6	65.9	84.6	99.1	Deteriorating
Current ratio	4.96	4.58	4.10	4.21	Normalising from excess
Quick ratio	3.88	3.47	2.92	2.92	Normalising from excess
Cash	$2,262,964	$2,420,755	$2,577,440	$2,647,367	+17%

Capital absorbed (DIO + DSO) against vendor offset (DPO), days

Source: Balance Sheet (report −202) as of period ids 170, 175, 179, 182; Income Statement monthly columns for TTM flows.

Interpretation · arithmetic effect vs. real deteriorationPart of the DIO rise is arithmetic: a TTM denominator lags a growing business, so a 12% revenue increase depresses turns even at constant stock cover. That explains perhaps a fifth of the move. The remainder is real: inventory doubled while TTM COGS grew 8.6%, and the growth is not in transit accounts (both $0). DPO rose 25 days over the same window — the CCC would be ~125 days at baseline payment terms. The healthy-looking gap between capital absorbed and the cycle is vendor patience, not operating efficiency.

A/R composition — the third lens

A/R Aging Summary, as of 31 Aug 2026	Amount	% of total	Reading
Total open receivables	$2,108,405	100%	Ties to balance sheet 1110 at Aug-26 to the cent
— No Customer/Project — (all >90 d)	$1,229,547	58.3%	Unapplied opening-balance / migration residue — not customer exposure
Customer-attributed receivables	$878,858	41.7%	DSO on this basis: 26.4 days
… of which >90 days	$473,213	53.8% of customer A/R	~10 accounts, largest $110,579, $102,906, $86,007, $80,079, $68,119 — a genuine collections concentration
Current + 1–30 days	$208,071	9.9%	Recent billing is a small share of the book

Finding E1-F2 · Two receivable problems, not oneThe DSO finding splits cleanly. Fifty-eight percent of the balance is bookkeeping debris that inflates every A/R ratio and should be attributed or written off; on the remaining 42%, collections performance is acceptable in aggregate (26 days) but with more than half of it past 90 days, concentrated in a handful of accounts. Snapshot dates: the aging is as of 31 Aug 2026 (report default, last month-end); the balance sheet is as of the Aug 2026 period — they coincide this edition.

SECTION 07

Recommendations — New This Edition

Baseline edition: no prior recommendations to disposition. Classification items lead, per series convention.

01
Lock the classification basis with the controller. Confirm the treatment of 5360 3rd Party Contracting and 5340 Cost of Sales (COGS vs. opex), the DC/warehouse share of 6210 Salaries & Wages, and 6610 Rent; record the decision in the history file so Edition 2 benchmarks against a settled basis.
Section 03(b–c); E1-F3. Without this, every margin variance is arguable.
02
Attribute or write off the $1,229,547 unattributed receivable. Trace the “No Customer/Project” balance to its source journals; apply, reclassify, or reserve so the aging reflects customer exposure.
Section 06; E1-F2. Removes 37 days of phantom DSO.
03
Inventory build review. $1.09M of stock added since Dec-25 against +8.6% TTM COGS. Confirm intent (safety stock, new channel, FBA pre-positioning) and set a DIO target with a monthly check in this series.
Section 06; E1-F1. Principal working-capital finding.
04
Collections programme for the >90-day customer accounts. $473,213 across roughly ten customers; five exceed $68,000 each.
Section 06; E1-F2.
05
Costing review. Explain the 5370 Stock Adjustment credit and the Dec-25 / Mar-26 margin spikes; confirm whether opening-balance journals are posting to trading accounts.
Sections 02, 04; E1-F4, E1-F5.
06
Make off-site inventory isolable. Either sub-account 1210 by location class or capture a Current Inventory Snapshot (report 243) by location each edition so turns can be shown with and without 3PL/FBA/In-Transit stock.
Section 03(d). Needed for a like-for-like turns comparison.

SECTION 08

Methodology & Narrative Memory

Report runs (all sequential, all headers verified)

#	Report	Filters	Rendered header	Used for
1	Income Statement (−200)	crit_1_mod=LFY, crit_2=−1	Income Statement · FY 2025	Baseline P&L; COGS account map
2	Income Statement (−200)	LFY, crit_2=−1, range=acctmonth, expandlevel=1	FY 2025 (12 monthly columns)	Monthly trend; TTM flows
3	Income Statement (−200)	crit_1_mod=TFYTP, crit_2=−1, range=acctmonth	From Jan 2026 to Sep 2026	2026 monthly trend (Sep* partial)
4	Income Statement (−200)	TFYTP, crit_2=−1, range=all	From Jan 2026 to Sep 2026	YTD account detail
5	Income Statement (−200)	crit_1_from=173, crit_1_to=182, crit_2=−1	From Jan 2026 to Aug 2026	Complete-months YTD; BS cross-check
6–9	Balance Sheet (−202)	crit_1_to = 170 / 175 / 179 / 182, crit_2=−1 (Aug at account detail)	End of Dec 2025 / Mar 2026 / Jun 2026 / Aug 2026	Snapshots; inventory scope
10	A/R Aging Summary (274)	defaults	As of August 31, 2026	Composition
11	SuiteQL `account`, `location`	attributes only	—	Account numbers/types; off-site locations. No figure in any ratio came from a query.

Basis notes

Item	Treatment
Working-capital basis	TTM flows vs. period-end balances. Twelve months of monthly history exist before the baseline snapshot, so no fiscal-year fallback was needed.
Cross-checks	Balance-sheet embedded net income vs. Income Statement: Dec-25 $1,163,832.67 = $1,163,832.67; Aug-26 $1,196,785.95 = $1,196,785.95. A/R Aging total vs. BS 1110 at Aug-26: $2,108,404.79 = $2,108,404.79. All differences $0.00.
Partial period	Sep 2026 shown asterisked in Section 02 only; excluded from every snapshot, average and dispersion statistic.
Arithmetic	One evalJs computation from report figures pasted as constants; outputs stored verbatim in the history file.
Classification basis	Hash H40a9b636 over COGS membership; borderline accounts and inventory/revenue scope recorded in `classificationBasis`. Edition 2 compares before computing any delta.
Benchmarks	Approximate. Damodaran US sector page fetched live (HTTP 200) but exceeded parseable size (206K chars); standard published ranges used for blended specialty retail / consumer-goods wholesale distribution. Composites are aggregated from reported filings without normalising freight, labour or inventory scope — the yardstick itself carries several points of classification noise.
Industry inference	Item catalog is dominated by inventory parts and kits with apparel matrix items; classes are Apparel, Beauty, Home & Decor, Electronics; locations are two stores, two distribution centres, a 3PL and FBA. Read as multi-channel specialty retail with a distribution arm — hence two peer sets where they diverge.

Assumptions and caveats

Caveat	Evidence	Assessed impact
Demo / test dataset	Round Capital Stock; one full fiscal year of history; monthly opening-balance journals; suffixed location names (“01: San Francisco Store”); fixed assets < $15K on a $12M business	Method is production-grade; conclusions illustrative. Trend direction reliable, magnitudes not.
No income-tax provision	8800 Income Tax Expense = $0 in both periods	Net margin overstated vs. after-tax peer norms by roughly 21–26% of pre-tax income; net-margin row marked not comparable.
Unattributed A/R	$1,229,547 in “No Customer/Project”	Inflates DSO by ~37 days and A/R-to-revenue by ~10 pts; both bases shown.
Off-site inventory not isolable	Single 1210 account; 3PL / FBA / In Transit locations exist	Turns and DIO shown as booked; direction of bias stated.
DC labour not isolable	Single 6210 payroll account	Gross-margin band has no quantified lower edge; margin verdict withheld.
Consolidation	crit_2=−1; xElim subsidiary has no P&L activity	None material.

Narrative memory

Series history is held in benchmark_tracking_history.json, File Cabinet id 91609 (/SuiteScripts). Edition 1 recorded the methodology block, the classification basis (COGS map, hash, borderline table, inventory and revenue scope), four snapshots, monthly gross margins, eight findings E1-F1 … E1-F8, and six recommendations. Edition 2 will read the file, verify the classification hash, compute deltas, disposition each recommendation with evidence, and append its own block by fileEdit — the file is never re-emitted.