Hi Tuan,

I think it totally makes sense to look at this in terms of the P&L (in fact, that's exactly how I would recommend to think about most of the profitability cases). We don't know whether by "Profit" they mean Net earnings, Operating profit or Gross profit, so that might be something that you want to clarify in the beginning of the case to simplify the analysis (still I'd suggest to speak out your logic before asking).

A couple of minor comments:

- To your second point if it's not the gross margin, but the % of SG&A - (1) agree, (2) we can even simplify as "revenue decreases" (<=> gross profit decrease & gross margin stays the same). Also, can it be a change in D&A?

- To your third point, does it make sense to add Taxes as well?

Hope this helps!

Best regards,

Vasily

Hi Tuan,

I think it totally makes sense to look at this in terms of the P&L (in fact, that's exactly how I would recommend to think about most of the profitability cases). We don't know whether by "Profit" they mean Net earnings, Operating profit or Gross profit, so that might be something that you want to clarify in the beginning of the case to simplify the analysis (still I'd suggest to speak out your logic before asking).

A couple of minor comments:

- To your second point if it's not the gross margin, but the % of SG&A - (1) agree, (2) we can even simplify as "revenue decreases" (<=> gross profit decrease & gross margin stays the same). Also, can it be a change in D&A?

- To your third point, does it make sense to add Taxes as well?

Hope this helps!

Best regards,

Vasily