Correlation Between Cost Reduction and Profitability of Business - Softcover

Mohamed, Saed A.

Softcover

ISBN 10: 6208009707 ISBN 13: 9786208009700

Publisher: LAP LAMBERT Academic Publishing, 2024

Synopsis

This study explores the relationship between cost reduction through cost control and business profitability, focusing on Safarsame Modern Bus Company (SMB) for 2022 and 2023. Using a mixed research approach, it examines the correlation between payroll and utility cost reductions and profitability metrics such as net profit margin (NPM), return on assets (ROA), and return on equity (ROE). Quantitative analysis reveals negative moderate correlations between cost reductions and profitability ratios, indicating that cost-cutting means to profitability improve and was almost statistically significant, except between salary expenses and NPM. Qualitative findings identify SMB's strategies for reducing salary costs—downsizing staff with an internship program, performance-based compensation, and outsourcing—and for reducing utility expenses through behavioral changes and rate negotiations. The study recommends businesses adopt scientifically tested strategies for cost reduction to improve profitability, noting that both managers and academics can benefit from understanding these correlations for better decision-making and literature review.

Edition details

• Publisher: LAP LAMBERT Academic Publishing
• Publication date: 2024
• Language: English
• ISBN 10: 6208009707
• ISBN 13: 9786208009700
• Binding: Paperback
• Number of pages: 80