-Multiplier, Utilization, and Overhead are the dials you turn to calibrate profitability. -Your multiplier is limited by the competitive environment you’re in – it’s not practical to think you can charge as much as you’d like -Utilization and Overhead
Generating Accrual Profits
Increase Net Multiplier and Utilization by 5%
Increase Net Multiplier by 5%
Increase Utilization by 5%
Base Case
Net Multiplier Utilization Overhead Revenue Factor Revenue (NSR) Direct Labor Indirect Labor Other Expenses Total Expenses Net Income (Profit) Profit % on NSR All Labor
3.00 60.0% 150.0% 1.80
3.15 60.0% 150.0% 1.89
3.00 63.0% 138.1% 1.89
3.15 63.0% 138.1% 1.98
$ $ $ $ $ $
$ $ $ $ $ $
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$ $ $ $ $ $
10,800,000.00 3,600,000.00 2,400,000.00 3,000,000.00 9,000,000.00 1,800,000.00 16.67% 6,000,000.00
11,340,000.00 3,600,000.00 2,400,000.00 3,000,000.00 9,000,000.00 2,340,000.00 20.63% 6,000,000.00
11,340,000.00 3,780,000.00 2,220,000.00 3,000,000.00 9,000,000.00 2,340,000.00 20.63% 6,000,000.00
11,907,000.00 3,780,000.00 2,200,000.00 3,000,000.00 9,000,000.00 2,907,000.00 24.41% 6,000,000.00
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THE PRINCIPALS ACADEMY 2022
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