Category: Profitability

Setting Prices

When we start working with a new client, one of the first conversations we have is about setting prices.  A company’s pricing strategy (and whether they have articulated it) tells me a lot about the culture of the organization and how they make money.   Here’s a video that discusses different pricing strategies as well as which

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3 Benefits of an Analysis of Customer Profitability

Over time weeds grow in any garden. In the same way, unprofitable customers work their way into your company. To avoid the high costs of low profit customers, you should perform an annual analysis of customer profitability. Therefore, weed your garden of customers who are sapping your profits and cash flow. Although there are many

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Using Flash Reports to Improve Productivity

In today’s fast-paced business world, most companies use some sort of dashboard or flash report to monitor and improve productivity and other key performance indicators.  Despite their wide use, many are still confused on what exactly should be measured and what constitutes a key performance indicator. Using Flash Reports to Improve Productivity What often happens is

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What The CEO Wants You to Know

Book: What the CEO Wants You to Know What the CEO Wants You to Know by Ram Charan is one of the financial leadership books that we encourage all of our coaching participants to read. In this book, you will learn… How your company really works Developing business acumen Tackling complexity Viewing business like an investor

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What is Profitability Index?

See Also: Financial Ratios Profit Center Net Profit Margin Operating Income EBIT Income Statement What is Profitability Index? What is profitability index? The profitability index definition is a tool for measuring profitability of a proposed corporate project by comparing the cash flows created by the project to the capital investments required for the project. It

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Theory of Constraints

See Also: Total Quality Management Activity Based Management How to Manage Inventory How to Manage Your Banking Relationship Malcolm Baldrige National Quality Award Theory of Constraints Definition Theory of Constraints is a broadly applicable approach to managing business operations within an organization. Basically, the theory of constraints is a management philosophy designed to help organizations

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Transfer Pricing

See Also: Service Department Costs Responsibility Center Profit Center Cost Center Cost Driver Transfer Pricing Transfer prices are the prices used for transactions within a company. A transfer price is an internal price. When one division of a company sells a product to another division of the same company, the price charged is called a

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Professional Employer Organization (PEO)

See Also: Advantages of Professional Employer Organizations How to Select a PEO PEO Compared to Outsourcing Payroll Professional Employer Organization FAQ’s Service Department Costs Professional Employer Organization | PEO Definition The Professional Employer Organization or PEO definition is a vendor that assumes, via contract, a significant portion of the employer’s responsibilities and associated risk for either

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Segmenting Customers for Profit

Segmenting Customers for Profit Process Market segmentation is the process of dividing up the total market based on identifiable characteristics, which have common needs. You can also apply the concept of market segmentation to your customers. For example, you can segment your customers based on the cost to service, the size of the average sale

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Success Is Your Business

See Also: Emotional Intelligence in the Workplace Are You Collecting the Data You Need to Run Your Business? Five Reasons To Pay Attention To CRM Software Warning Signs of a Company in Trouble Working Capital Analysis Success Is Your Business I am going away from talking about traditional cash flow analysis this week. I was

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Segment Margin Example

See also: Segment Margin Margin vs Markup Prepare a Breakeven Analysis Budgeting 101: Creating Successful Budgets Cost Volume Profit Definition Variable vs Fixed Costs Segment Margin Example Segment Margin is important to a company because, most obviously, companies make profits off of their services and products. To acquire revenue from these services and products, a

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Segment Margin

See Also: Segment Margin Example Segmenting Customers for Profit Net Profit Margin Analysis Operating Profit Margin Ratio Margin vs Markup Profitability Index Method Segment Margin Definition Segment margin is a measure of profitability that applies to individual product lines. It is calculated as segment revenues minus variable costs minus avoidable fixed costs. It is also used to

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