15 Questions
What is the ultimate scorecard for a business according to the CFO?
Profit and Loss Statement (P&L)
According to the CFO, what is an important tool for any leader in the organization?
Understanding financial statements
What is a large part of the equation as it relates to profit, according to the CFO?
Revenue from sales
What does the CFO emphasize as an important factor in determining a company's ability to generate profit?
Management of expenses
What does Fresh Edge use to calculate profitability?
EBITA (earnings before interest, taxes, depreciation, and amortization)
What is the formula for Fresh Edge's profit based on?
Selling products for more than the purchase cost, covering expenses, and generating a profit in dollars
What plays a crucial role in generating gross profit for Fresh Edge?
Sales at a price higher than the cost of goods
What sets the stage for sales to generate margin at Fresh Edge?
Procurement's ability to secure products at competitive prices
What ensures efficient and timely handling and delivery of products at Fresh Edge?
Operations
What are used to measure the financial health of the organization at Fresh Edge?
Key Performance Indicators (KPIs) and scorecards
What is a crucial metric for understanding company growth and trends at Fresh Edge?
Cases or volume shipped
What helps in understanding pricing effectiveness and market price relevance at Fresh Edge?
Gross profit per case
What involves distinguishing between fixed costs and variable expenses at Fresh Edge?
Managing expenses
What does the example of selling avocados for $30 with a cost of $23.40 illustrate at Fresh Edge?
Generating gross profit, managing expenses, and resulting EBITA
How does each role in the company impact Fresh Edge's profitability?
By maximizing margins and controlling costs
Study Notes
Understanding Fresh Edge Profitability
- Fresh Edge calculates profitability using EBITA (earnings before interest, taxes, depreciation, and amortization).
- The formula for Fresh Edge's profit involves selling products for more than the purchase cost, covering expenses, and generating a profit in dollars.
- Sales play a crucial role in generating gross profit by selling products at a price higher than the cost of goods.
- Procurement's ability to secure products at competitive prices sets the stage for sales to generate margin.
- Operations ensures efficient and timely handling and delivery of products.
- Back office functions such as finance and HR support the business and optimize systems.
- Key Performance Indicators (KPIs) and scorecards are used to measure the financial health of the organization.
- Cases or volume shipped is a crucial metric for understanding company growth and trends.
- Gross profit per case helps in understanding pricing effectiveness and market price relevance.
- Managing expenses involves distinguishing between fixed costs (e.g., rent, utilities) and variable expenses (e.g., payroll, fuel).
- The example of selling avocados for $30 with a cost of $23.40 illustrates generating gross profit, managing expenses, and resulting EBITA.
- Each role in the company, whether in sales, procurement, operations, or back office support, impacts the company's profitability by maximizing margins and controlling costs.
Test your knowledge of Fresh Edge's profitability calculations and factors impacting it with this quiz. Explore EBITA, gross profit, expenses management, KPIs, and more to understand how different roles contribute to the company's financial health.
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