Business Profitability and Expenses Essay

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revenue and decreasing costs and expenses for a business are two totally separate but interactive components. All entities that are in business; both for profit and non-profit, should be concerned with increasing the revenues as well as decreasing the expenses; it makes smart business sense and those entities that do not do so often find themselves becoming irrelevant or even worse, no longer viable. As an example, even the public hospitals in China show concern as evidenced in a recent paper. The research found that "With market-oriented economic and health-care reform, public hospitals in China have received unprecedented pressures from governmental regulations, public opinions, and financial demands. To adapt the changing environment and keep pace of modernizing healthcare delivery system, public hospitals in China are expanding clinical services and improving delivery efficiency, while controlling costs" (Zhao, Yu, Liu, Ma, Wang, Kong, Li, Ma, Cui, Xu, Yu, Bao, Guo, Wang, Zhang, Li, Xie, Jiang, Ke, 2013, p. 1). The Chinese hospitals, by expanding their clinical services, are seeking to enhance revenue, while at the same time they are becoming more efficient at presenting delivery and are seeking to 'control costs', or in other words, manage expenses.

This paper seeks to determine whether a local company can increase revenues while lowering expenses. The paper will determine if those two objectives are being met by collecting data that is quantitative in nature. A quantitative analysis will then be undertaken that provides results based on numerical data.

What this paper seeks to discover is whether there are specific mathematical quantitative formulas that can be used to either increase revenue or lower expenses. Three specific formulas will be introduced, described and displayed. Many studies are designed to consider the different variables that are present throughout the study. Formulas take those variables and mathematically analyze them in order to determine an end result or finding.

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Variables are present in a variety of areas. As an example, a recent report of Presidential elections in the United States found that "at the simplest level, the number of presidential candidates in a race can affect who is elected, and by extension which policies a government pursues" (Hicken, Stoll, 2008, p. 1109). It is a simplistic assertion, that is true, but one that measures up quantitatively. It is hoped that this paper, by presenting mathematical formulas that provide quantitative findings will contribute to the current literature in a meaningful manner.

One simple formula that can be used in business to increase revenue is (#*%*$)/t~Revenue (Pozin, 2012). The way it can best be explained is by describing each of its components. # is equal to the number of leads generated on a monthly basis. # is multiplied by the conversion rate (%). In other words, how many leads actually convert into transactions; for example if during the month 50 leads were generated and 20 of the leads turned into sales then the percentage would be forty percent. Leads are multiplied by the conversion rate and then multiplied by the amount of money (average amount) generated by each sale. The result is divided by the T, which is of course, the length of time it takes for the transaction to be completed. The remaining figure is the revenue.

How this formula works is dependent on the variables. If an increase in revenue is desired, then one or more of the variables will have to be changed. The company could change any of the variables but as an example if the company changed how much it charged and the other variables remained the same, the end result would be increased revenue.….....

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