If a Firm Wants to Increase Profits, It Can Attempt

question 181

Essay

If a firm wants to increase profits, it can attempt to (a)increase revenues, (b)decrease expenses or
(c)do both. What profit enhancement option strategies could be used by a local bank to increase revenues?

Evaluate make-or-buy, continue-or-discontinue, and other operational decisions using incremental analysis.

Apply the principles of incremental analysis to special order decisions.

Assess the financial impact of outsourcing production versus manufacturing in-house.

Calculate the incremental income or loss from further processing decisions.

---

Definitions:

Compounded Annually

Interest on an investment that is calculated once per year, adding to the principal amount for future interest calculations.

Profit-Sharing

A company policy of distributing a portion of net profits among its employees as a form of incentive and reward.

Annual Profit

The financial gain or earnings of a business or individual for one full year after all expenses have been subtracted from total revenues.

Future Value

The estimated value of an investment at a specific date in the future, taking into account factors like interest rates or returns.