Evaluation of method Use these

Method to increase Examples - fill in the missing words from the

hints to explain the possible
profit margins word bank
problems / impacts
1  Quality? Pricing?
1  Using ________ materials, e.g. rubber not
leather soles on shoes.
2  Quality?; Distant
factories?
2  Cutting labour costs, e.g. ________
production to low-labour-cost countries,
3  what cost might increase
such as Dyson making ________ cleaners in
Increase gross and here though?
Malaysia.
operating profit margin
by reducing direct What do you need to do for
3  ________ labour costs by increasing
costs remaining staff?
productivity through ________, e.g.
Hyundai’s production line uses some of the
most labour-saving robots in the ________. Impact on short-term
profits ?
4  Cutting ________ costs by reducing
workers’ pay. 4  Motivation ? impact on
productivity and quality?
1  Raising the ________ of the product with
no significant increase in ________ costs, e.g. 1  Total revenue impact?
Increase gross and Mauritius Telecom raising the price of its This connects with which
operating profit margin ________ connections. other key concept?
by increasing price
2  Petrol companies increasing prices by 2  Consumer reaction?
more than the price of ________ has risen.
Cutting overhead costs, such as rent, ________
costs or management costs but ________ sales
1   image?
levels, for example:
Increase operating
2  Cutting promotion costs
profit margin by 1  ________ to a cheaper head office
could impact on?
reducing overhead location.
costs
3  Cutting managers – or
2  ________ promotion costs.
lower salaries – could impact
on….?.
3  ________ the organisation.

Evaluation of method Use these

Examples - fill in the missing
Method to increase liquidity hints to explain the possible
words from the word bank
problems / impacts
 If assets are sold quickly
Sell off fixed assets for cash – what could be problem?
■ ________ and property could be
could lease these back if still  What are the downsides of
sold to a ________ company.
needed by the business leasing charges ?.

 Stocks of ________ goods  Impact on gross profit

could be sold off at a
________ to raise
Sell off inventories for cash (note:
________.
this will improve the acid-test
 ________ stock ________
ratio, but not the current ratio)
will achieve this
objective.
margin ?.
 What might consumers think
if inventories are sold off
cheaply.
 Is it always possible to
reduce stocks?

Increase loans to inject cash into ■ ________ loans could be taken  Which other financial ratio
the business and increase out if the bank is ________ of the will this affect?
working capital company’s ________.
  Which costs will increase if
you do this?

WORD BANK
prospects / relocating / delayering / leasing / variable / reducing / maintaining /
cutting/ management / land / finished / cash / JIT / confident / discount / long-term /
wage / vacuum/ automation / cheaper / world / price / oil / moving / broadband /
promotion