Profitability Analysis

At the end of the day every business owner wants to know the answer to this one question: Are we profitable? The answer may not be obvious and can lead to frustration. The waters can get muddy when attempting to dissect costs like direct labor, indirect labor, materials, logistics, overhead, debt service, depreciation, and the list goes on! To make matters worse, profitability analysis changes from one industry to the next. General Contractors and Manufacturers require focus on materials, subcontractor costs, work-in-process, and inventory turns while Engineering and Professional Services place emphasis on direct labor hours and costs. Understanding your financial data will allow you to maximize your customer pricing, make growth decisions, and strategical reduce costs.