Published by:
Harvard Business Publishing
Length: 8 pages
Share a link:
https://casecent.re/p/46960
Write a review
|
No reviews for this item
This product has not been used yet
Abstract
Four truths apply to every business situation: 1) it is essential to be a lower-cost supplier; 2) to stay competitive, the inflation-adjusted cost of producing and supplying products and services must trend downward; 3) the true cost and profit pictures for each product/market segment must always be known; and 4) a business must concentrate as much on cash flow and balance sheet strengths as it does on profits. Various costs must be carefully isolated and assigned; expense categories such as R&D, sales, general, and administrative costs must not be ignored. Also gross margins should usually not be less than 40% and assets should not be over 60% of annual sales.
About
Abstract
Four truths apply to every business situation: 1) it is essential to be a lower-cost supplier; 2) to stay competitive, the inflation-adjusted cost of producing and supplying products and services must trend downward; 3) the true cost and profit pictures for each product/market segment must always be known; and 4) a business must concentrate as much on cash flow and balance sheet strengths as it does on profits. Various costs must be carefully isolated and assigned; expense categories such as R&D, sales, general, and administrative costs must not be ignored. Also gross margins should usually not be less than 40% and assets should not be over 60% of annual sales.