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Profitability is linked to asset utilization and efficiency from "summary" of Romancing the Balance Sheet: For Anyone Who Owns, Runs or Manages a Business by Anil Lamba
Understanding the relationship between profitability and how effectively assets are used reveals the heartbeat of any business. It’s not merely about generating revenue; it’s about making the most out of what you have. Assets, whether they be physical, financial, or human, must work hard to drive profits. Utilization of assets refers to the extent to which these resources are employed in generating income. High utilization means that the assets are actively contributing to revenue, while low utilization highlights inefficiencies. For instance, a factory running below capacity will not only struggle to cover its fixed costs but also miss out on potential profit opportunities. Effic...
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