Hello,
I was hoping someone could help me figure out how to solve these problems without using 100 or 1000 as an arbitrary value for revenue. Could you please explain an assumptions in your calculation and how you would go about solving this.
Problem #1
- Clients Profitability is (10%)
- Competitors Costs are 20% less than the client.
- Competitors Price is 10% less than the client.
-------- What is the competitors Profitability?
Problem #2
Cost Structure of the Client
- 70% Raw Materials
- 20% manufacturing/automation
- 10% personnel
------- By how much should raw materials decrease for our client’s profitability to be the same as the competitors?
Thank you!