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October 22, 2008
MODEL WORKSHEET
Calculate the Impact of Accidents on Profits & Sales
Use this worksheet to determine the total costs of injuries and illnesses and their financial impact on your company’s business operations.
DIRECT COST
To calculate direct cost of accidents/injuries, enter the following information:
* Total value of insurance claim for injury/illness $________________
(consists of medical costs and indemnity payments)
INDIRECT COST
To calculate direct costs of injury/illness, multiply the direct cost by a cost multiplier. The cost multiplier you use will depend on amount of direct costs
| If Direct Cost Is | Use This Multiplier |
| $0 - $2,999 | 4.5 |
| $3,000 - $4,999 | 1.6 |
| $5,000 - $9,999 | 1.2 |
| $10,000 or more | 1.1 |
| * Direct Cost | X | Cost Multiplier | = | Indirect Cost |
| $___________ | $___________ | $__________ |
TOTAL COST
| * Direct Cost | + | Indirect Cost | = | Total |
| $___________ | $___________ | $__________ |
IMPACT ON PROFITABILITY
To calculate an injury/illness’s impact on profitability, use your company’s profit margin to determine sales your company would have to generate to pay for the injury/illness.
- Divide total profits by total sales to get your profit margin
| Total profits Total sales |
= | Profit Margin |
| $___________ $ |
= | ______________ |
- Divide total cost of injury/illness by profit margin to calculate how many sales your company must generate to pay for injury/illness. Keep the profit margin in decimal form.
| Total Cost of Injury or Illness Profit Margin |
= | Sales Needed to Pay for Injury/Illness |
| $___________ | = | $______________________ |
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[...] worth of product. A $100,000 claim would take $4.2 million in sales to make up. There’s a model worksheet in the Tools Section of SafetyXChange that you can use to apply this formula. I wish you all a safe [...]
[...] $208,000 worth of product. A $100,000 claim would take $4.2 million in sales to make up. There's a model worksheet in the Tools Section of SafetyXChange that you can use to apply this formula. I wish you all a safe [...]
I so appreciate your site. I am new to the safety arena, but will be marketing our product primarily through Safety Mgrs and Wker's Comp Ins. companies. In this economy, I believe this is the best approach. Your worksheets will be VERY helpful to me in presenting the savings to be realized by risk reduction.
Lynne Hamilton
Hamilton Tools