The New Paradigm of Profitability
May 16, 2019
By: Jorge Gracia
Managing Partner of InterCapa / EconoFinanzas
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Achieving a return on investments above the cost of capital should be the central financial objective of any business.
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In practice, traditional profitability metrics offer only partial perspectives with the aggravating circumstance that they do not incorporate the risk factor.
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Financial statements are photos of the past. It is necessary to analyze the macroeconomic and industry trends, to project the expected profitability levels from the competitive position of the company.
Simple and revealing variables such as sales prices in the industry give us an idea of the intensity of the rivalry and its effects on profitability throughout the value chain.
Added to the accelerated demographic transformation are global competition, technological change and disruption in business models, which impact sales and profit margins.
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Together, these factors generate winners who concentrate growing market shares (Amazon, Uber, Oxxo), and losers who fail to respond to the new paradigms of technology, innovation and strategic information.
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I cordially invite you to the Profitability Measurement and Improvement course, in which we will address these and other key issues - with hard data - that will make it easier for you to optimize the financial performance of your company.
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The format is online and you can request it in person for your company. We are waiting for you.
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Request reports here.