Question

What are some specific things the company can do to improve performance in the challenge area? (Note: this is the 3rd exercise in the table. I forgot to change the number from 1 to 3) (At least 2 sentences please.)

Answer 1

Example 1

The net profit margin is very low, which is a challenge. To improve the net profit margin, the following steps could be taken :

• Try to improve the low operating margin
• Decrease the SGA/Revenues, which is quite high
• Try to increase the low fixed asset turnover

Example 2

The net profit margin is very low, which is a challenge. To improve the net profit margin, the following steps could be taken :

• Try to improve the low operating margin
• Try to increase the low fixed asset turnover
• Try to decrease the high days sales in receivable

Example 3

The net profit margin is very low, which is a challenge. To improve the net profit margin, the following steps could be taken :

• Try to improve the relatively low gross margin
• Try to increase the low fixed asset turnover