Hi Niklas,

while profits is always Revenues-Costs, profitability may be interpreted differently, in particular according to the denominator that you are considering. Most of the time profitability is (Revenues-Costs)/Revenues, but sometimes there may be differences. As a consequence, in a profitability case, compared to a profit one, you should:

1. Clearly define what the interviewer means for profitability
2. Analyze the related metrics to identify which component changed compared to the past. Most of the time these will be Revenues and Costs, but as mentioned could be different

The rest of the analysis will be the standard one for a profitability case.

Best,

Francesco

Hi,

Whenever you have a case, you should be thinking of three things:

• How is the case similar to what I've done before
• How it is different?
• How should I address the difference in my structure / clarifying questions?

It can be a case about the profit, but can have different nuances (and it will not necessarily be declining profits):

• Profit can be lower than planned
• Profit can be lower than the competitors
• Profitability issue

How should you address it?

• You can ask a clarifying question (E.g. for profitability question you can ask: was there a profit decline as well?)
• Adress it in your structure (e.g. for profits lower than planned you can have a separate bucket called "Plan" and ask if the assumptions / approach changed)
• By asking the right questions (e.g. for profits lower than the competitors, you should be comparing revenues and costs with the competitors instead of analyzing the trend)

Best