33 Profit planning
‘Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.’
Wilkins Micawber, fictional character from the novel David Copperfield by Charles Dickens
In a nutshell
‘Profit planning’ is an important business discipline. It impacts pricing (see Chapter 32 Profitable pricing), budgeting (see Chapter 34 Budgeting and forecasting) and investment appraisal (see Chapter 35 Investment appraisal).
Essentially it is a method of calculating forecast profits for different products and services.
Profit planning requires an understanding of variable and fixed costs as well as the concept of ‘contribution’. ...
Get The Finance Book, 2nd Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
