This chapter features introductions to the overall picture of the contents of what you will learn through the presentation, and the ways to think of the basics of it.

What is the purpose of business?  It is to accrue profit.  It is also correct that it is to provide value for customers.  However, businesses which are valued by customers will lead to profit.

What is required to do in order to accrue profit?  Take a close look at the figure below.  This is called a profit structure diagram.  It provides an analysis of each element that composes profit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Understanding these elements leads to understanding the ways to accrue profit.  There are two ways to accrue profit.  One is to increase sales.  The other is to lower costs.

 

Because:

Profit=Sales－Cost

This is profit.

In this presentation you will learn the basics of finance based on the profit structure diagram.  The purpose is to acquire knowledge that can be used practically by practicing the exercises.

Analyzing sales further:

Sales=Sales quantity × Average price per customer.

This is sales.

 

Analyzing cost:

Cost=Variable costs + Fixed costs.

This is cost.

 

In other words, the ways to accrue profit are:

Increase sales quantity.

Raise the average price per customer.

Lower the variable costs.

Lower the fixed costs.

It means to conduct one or conduct any one of them combined.