Profitability analysis

This determines the costs that the business can afford. But few companies know exactly how much profit each product or service makes. Marginal costing, marginal pricing and the incorrect allocation of overheads can lead to disaster.

We help managers regain control. We find that:

• activity-based costing can lead to dramatic reorganisation of product ranges, customer groupings and facilities
• database analysis (usually described as ‘the cube’) provides core performance data that managers can use to challenge their instincts and prejudices and to make difficult decisions
• value-chain accounting highlights the potential for improving profitability by monitoring the balance between costs and value at every stage in the supply chain.

Analysing the profitability of products, services and customers is a common element of our work. The tools that we use can be applied in a wide variety of sectors, in large businesses and in smaller operating units.