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3. Compute the projected profit for the order quantities suggested by the management team under three scenarios: worst case in which sales equal 10,000 units, most likely case in which sales equal 20,000 units, and best case in which sales equal 30,000 units.
Managementâs success or failure determines the companyâs profitability. Strong sales growth is meaningless if management allows costs and expenses to grow disproportionately. In this Fundamental Focus, we highlight three key profit margin ratiosâgross profit margin, operating profit margin and net profit margin.