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Strategic Profit Model

Financial management today means keeping a careful watch on: a) producing a return on activity (profit on sales) and b) balancing these results against the amount of resources that are needed to earn profits.

Type of Tool: Financial

Description: Measuring purchasing and supply's financial impacts upon the organization. The strategic profit model tool highlights how purchased materials, inventories, investments in fixed assets, operating expenses, and working capital all build up to the key measures of

  1. net income,
  2. capital employed, and
  3. return on capital employed.

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