From the course: Corporate Finance: Profitability in a Financial Downturn
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Two ways to boost profitability
From the course: Corporate Finance: Profitability in a Financial Downturn
Two ways to boost profitability
- One of the most important questions companies ask during a downturn is, how do we boost profitability? It's a critical question that has to be answered and I'm reminded of the phrase, measure twice, cut once. It's something people used to say about cloth, but you could say the same thing about cutting expenses in a business. Because boosting profitability often depends on cutting the right expenses. That's why you want to measure twice but cut once, to make the right cuts, and one of the best ways to do this is with a spend analysis. A spend analysis is a large analytical project that looks at all the different spending data a company has. You're pulling together all the different receipts and electronic records, you might be interviewing people, the goal is to analyze what you're spending your money on so that you can identify where there might be opportunities to cut and boost profitability. Oftentimes, a spend…
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