Profit Leverage

Based on the examples shown in Table 1-3 and described on pp . 17-18 what is the increase in sales necessary to have the same impact on before-tax profits as a savings in logistics of 350 ,000 if the net profit on sales is 7 percent

Given : Net profit on sales 0 .07

Savings 350 ,000

Increase in sales can be computed by dividing the savings by the net profit sales

Increase in Sales Savings /Net profit on sales 350 ,000 /0 .07 5 ,000 ,000

The increase in sales given a

net profit on sales of 7 percent and a savings of 350 ,000 is 5 ,000 ,000

What is the profit leverage effect of logistics and , what are the greatest costs saving opportunities for logistics

Profit leverage is a very important aspect when it comes to logistics Potential profit leverage can result to increased efficiency in logistics and can contribute to the development of interests in logistics management . Profit leverage has three main areas in which a company can achieve a profit increase . First , a strategy in which profit generation is obtained by increasing marketing efforts . In this strategy , a company can experience a difficulty in increasing the sales because of reasons like resource problems , competition and other market conditions . Second , a company can generate profit by increasing the price of their products . This method is the most unlikely method to be used because price increase is not possible on some market conditions Price increase in a firm 's...