Chapter 9
Financial Analysis
Analyzing Costs and Profits for Pricing
On the role of costs and financially analysis, we enjoy the quote from F. Scott Fitzgerald who once said, “It was only a sunny smile and little it cost in the giving but like morning light it scattered the night and made the day worth living.” Internal financial considerations and external market considerations are, at many companies, antagonistic forces in pricing decisions. Financial managers allocate costs to determine how high prices must be to achieve profit objectives. Marketing and sales staff analyze buyers to determine how low prices must be to achieve sales objectives. Neither approach will lead to optimizing the firm’s profitability ...
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