Improving Cash Flow & Profit

What are two ways to improve profit and profitability in a business?

• Reducing expenditure on fixed and variable costs

• Increasing the selling price per item.

What was one strategy used by Morrisons in 2015 to increase profitability?

Morrisons delayered its structure by removing department supervisors to reduce costs.

What is a potential challenge of reducing expenditure on costs?

It can reduce quality which may lead to a decrease in sales and revenue.

How can increasing selling prices affect a business?

It can deter customers from purchasing products, decreasing sales volume and market share.

What is one challenge of improving cash flow related to trade credit periods?

Reducing trade credit periods can lead to decreased customer satisfaction, reducing sales volume.

What might happen if a business asks suppliers for increased trade credit periods?

It may create tension with suppliers, resulting in poorer relationships and reduced dependability.

Give an example of how a sofa store might improve its cash flow.

By requiring customers to pay within 6 months instead of 12 months, potentially reducing customer satisfaction.