Profitability Analysis

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.
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The solution to achieving crystal clear visibility is to optimize your Profit and Loss Statement (Income Statement) in QuickBooks. Backbone CFO uses tools provided by QuickBooks such as Product/Service Lists, Classes, Locations, and a customized Chart of Accounts, to maximize insights and actionable improvements. Backbone CFO will help you understand the difference between your gross profit, EBITDA (earnings before interest, taxes, depreciation, and amortization), and net profit. Moreover, we will help you understand your business’ overhead rates, sometimes called indirect rates. 

Backbone CFO will create a line of sight to profitability that bests fit your business and market. Examples include profitability by:

  1. Customer 
  2. Project / Job
  3. Location / Division
  4. Product / Service

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