There is no hiding that companies had to look hard and rely on deep financial analysis to weather a storm like most of us witnessed in 2020. One of the key components was the growing focus on the Profitability of their services and products line. Profitability became front and center, whether it was via cost management or revenue or investment management or ALL of the above.

While profitability is an easy concept to grasp, it is notoriously difficult to manage, especially in rapidly changing market conditions. How can we manage profitability in times of uncertainty? One answer is by using the profitability analysis framework.

Maintaining or increasing profit margins is key to the development of a company, but in many cases, it represents quite a challenge. I can see two main reasons for this: price pressure on the revenue side and inflation on the cost side. This blog explores 5 ways finance can support a company’s revenue maintenance.

One of the most important aspects of the FP&A role is to be able to provide insights by analysing the P&L. On the surface, P&Ls measure the profitability of the whole business and a lot of times FP&A professionals will look at P&Ls for the overall health of the organisation. 

The webinar will take place on 28 September at 11:00 AM PDT to discuss Managing Profitability in Uncertain Times.

Using P&L as a map for the journey (see image 1 below), the first three articles explored three initial steps focusing on the pre-P&L analysis and price management. In this article, we will move via net sales to marginality and look at how finance can take initiative and lead the effort to increase both sales and business profitability.