Download PDFOpen PDF in browserRight-Sizing the Construction Company With Financial Ratios: Cash to Revenue and Base Payroll to Revenue10 pages•Published: July 23, 2025AbstractToday’s construction industry is highly competitive, and to maintain an advantage in the market, construction companies must manage finances as efficiently as their projects. Right-sizing the construction firm is a process of balancing assets and liabilities, efficiently managing project costs, and leveraging overhead resources to generate higher profits. Two methods for right-sizing a company are to 1) manage cash balances, and 2) maintain the appropriate level of base payroll (overhead personnel). This study uses survey results from nearly 1300 companies in 2022 to provide insight into the use and effectiveness of these methods. Descriptive statistics were used to analyze central tendency and evaluate application in the construction industry. Results provide a mean and standard deviation for evaluating the appropriate levels of cash as a comparison to revenue. Similarly, those same statistics evaluated the relationship between expenses of overhead personnel and annual revenue. A trendline for both ratios was calculated to help companies ‘right-size’ their respective organizations. Limitations of the dataset are addressed in the conclusions, specifically the variation of how companies report their base-payroll. This study serves as an instrument for guiding managerial decisions about establishing levels of cash as well as establishing budgets for overhead.Keyphrases: accounting, financial, managerial In: Wesley Collins, Anthony J. Perrenoud and John Posillico (editors). Proceedings of Associated Schools of Construction 61st Annual International Conference, vol 6, pages 571-580.
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