Consideration of factors influencing the dynamics of sales profitability allows us to identify the strengths and weaknesses of company management and develop measures to improve business sustainability.
Increase in sales profitability
Revenue is growing faster than expenses. This may be due to:
increasing sales volumes;
changes in the sales range.
As the volume of goods sold in physical terms increases, revenue increases faster than expenses due to production leverage.
The cost of goods consists of variable and mandatory costs. Changing the cost structure can have a significant impact on the amount of profit. Investment in fixed assets leads to an increase in fixed costs and, in theory, should be accompanied by a decrease in variable expenses. However, there is no linear dependence here, which makes it difficult to select the optimal combination of fixed and non-fixed costs.
Increase in sales profitability
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The enterprise's revenue may grow not only due to the rise in product prices, but also due to the fact that the range of goods changes. This vector of development of the organization is favorable.
Costs are falling faster than revenue. This may be the result of:
increase in the cost of products or services;
changes in product range.
In this case, profitability formally increases, but revenue volume falls, so this trend cannot be clearly defined as favorable. In order for the conclusions to be correct, it is necessary to analyze the pricing and product range policy of the enterprise.
Revenue is growing and expenses are decreasing. This may be due to:
price increase;
change in sales assortment;
revision of spending standards.
This trend is favorable, and further honduras phone data analysis is aimed at assessing how sustainable this position of the enterprise is.
Decrease in sales profitability
Expenses are growing faster than revenue. Possible reasons:
inflationary rates of expenses are higher than revenues;
reduction in cost;
change in the sales assortment structure;
increase in spending rates.
This trend is bad. To solve the problem, it is necessary to analyze the pricing and assortment policy of the enterprise, evaluate the cost control system.
Costs are falling more slowly than revenue. This may be