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How can sales rise while profit falls?

A busy shop can sell more and still finish the year with less profit. Revenue records one part of the story; the costs recognized against it tell another. Staffing, supplies, discounts, and expansion can make growth look very different when viewed through an income statement.

3–7 min

Questions you could explore

  • Which costs would need to change for higher sales to produce lower profit?
  • Why might profit and money in the bank tell different stories?

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Business

How a profitable business runs short of cash

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8–10 min

How a profitable business runs short of cash

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Why doesn’t a factory always reach its rated output?

A machine's maximum running speed does not tell you how many usable products leave a factory. Stoppages, changeovers, and rejected output can create a gap between a capacity claim and an actual day's production.

4–5 min

Why doesn’t a factory always reach its rated output?

Business4–5 minA machine's maximum running speed does not tell you how many usable products leave a factory. Stoppages, changeovers, and rejected output can create a gap between a capacity claim and an actual day's production.

Why does one transaction change two sides of the accounts?

Business3–5 minBuying equipment changes more than what a business owns. Paying cash or borrowing the money affects the rest of the accounts differently, while assets must still balance against liabilities and equity.

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