Use P&L as a structure for a Profitability Case

That’s a good and important question. I am glad you asked.

People with finance background normally do this. This is definitely one of the most useful approaches to profitability cases. However, interviewer in 90% cases gives you a synthesis from financial statements e.g. revenue is decreasing/stagnating, costs steadily increase last 5 years.

You should take into acoount that you still structure case as revenue and costs. And then you can use different options for deep-dives in costs:

1. Divide between variable and fixed
2. Divide costs according to income statement (your suggestion)
3. Divide costs according to value chain

Revenue may be divided into the classification from cash flow statement. But it is not typical for cases, as it heavily depends on a client business.