【A.06.05】What if the sales drop > MOS?

Briefing Note
Reading comprehension is a skill that empowers lifelong learning intelligence for a better self.
If sales drop more than the margin of safety..

✅ ..means that the actual sales are lower than what was projected in the margin of safety analysis.

✅ ..the business is selling below breakeven point, as a result, making losses.

✅ ..can lead to a situation where the company’s revenue and profits are not sufficient to cover its fixed costs and other expenses, which can put the company in a difficult financial situation.


The company needs to take immediate steps..

✅ ..reduce its operating expenses and/or increase its sales revenue.

✅ ..cost-cutting measures such as reducing overheads, renegotiating contracts with suppliers, and cutting back on non-essential expenses.

✅ ..focus on increasing its sales revenue by revising the price tag, improving its sales channels and marketing strategies, expanding into new markets, or launching new products or services.

✅ ..monitor its financial situation closely and take proactive steps to address any issues that arise.


If the company is unable to recover its sales and profits..

✅ ..may need to consider more drastic measures such as layoffs, restructuring, or even closure.


It is critical for the company..

✅ ..have a solid business plan and contingency plan in place to deal with any unexpected downturns in sales and the unfavorable economic condition.


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