Started case interview prep. One sample case had the client wanting to increase profitability. Midway through the case, I came to know the profits were actually up Y2Y. Any sources to teach me tricks?

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Why didn't you have to look at costs? Profit = Revenue - Costs .... Seems to me like that would be one of the two elements you'd need to investigate...

likefunny

Have you thought about joining our KPMG strategy group instead of looking at other firms?

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Agree with P1.
Check out Case interview prep website by Victor Cheng.

likesmart

OP, you still have to account for costs when it comes to profitability since costs is half of what profit is made of, which is in the profitability equation. Put another way:
If profitability = profits/revenue, and profits = revenue - costs, then profitability = (revenue - costs)/revenue

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Also - just an fyi, what you call "profitability" is actually called profit margin

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Well let’s start with basics and make sure you understand the difference between absolute and relative measures

likehelpful

Keep practicing buddy and being exposed to problems like this as a quick way to learn

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I hadn't thought of profits vs profitability before. No business background. So I found this a bit tricky. I broke it down into revenue and costs and realized later that I didn't have to take a look at costs at all.

So what exactly do you do at KPMG?

Profitability = profits / revenue * 100. On $100, you can make $10 profits and your profitability is 10%. But on $1000 revenue, you could still have $10 profits and profitability = 1%.

I have Victor Cheng LOMS. This was trickier because it wasn't directly a profits problem

To add a fun fact here, Net might not be net after all, eg the Belgians pay an after tax fee, so you end up with a net net revenue 😂🤷🏼‍♀️🙈

Yeah just try to clarify in the beginning that you’re talking about profit margin and not profit. Seems like it was just a learning experience for someone without a business background which is fine. Now you know profitability (more commonly known as profit margin) isn’t profit but one step more than profit.

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