Profitability Cases
Why exactly do you have to look at gross profit (instead of net profit)? Also, are there cases when this is not the case?
Aug 19, 2015
Trending Content - Management Consulting Forum
| +12 | KPMG vs Other T2s? | 3 | 11h |
| +10 | Politics on my CV? | 3 | 2d |
| +9 | FLDP to strategy consulting / corporate strategy? | 1 | 1d |
Career Resources
Career Advancement Opportunities
July 2026 Consulting
-
Boston Consulting Group 99.5%
-
Bain & Company 98.9%
-
McKinsey and Co 98.4%
-
Oliver Wyman 97.9%
-
LEK Consulting 97.4%
Overall Employee Satisfaction
July 2026 Consulting
-
Cornerstone Research 99.5%
-
Bain & Company 98.9%
-
Boston Consulting Group 98.4%
-
McKinsey and Co 97.9%
-
Oliver Wyman 97.4%
Professional Growth Opportunities
July 2026 Consulting
-
Bain & Company 99.5%
-
Boston Consulting Group 98.9%
-
McKinsey and Co 98.4%
-
Oliver Wyman 97.9%
-
LEK Consulting 97.4%
Total Avg Compensation
July 2026 Consulting
-
Partner (4) $361
-
Principal (30) $294
-
Director/MD (58) $274
-
Vice President (53) $247
-
Engagement Manager (113) $232
-
Manager (170) $173
-
2nd Year Associate (185) $142
-
3rd+ Year Associate (116) $135
-
Senior Consultant (355) $132
-
Consultant (642) $122
-
1st Year Associate (577) $121
-
3rd+ Year Analyst (164) $121
-
NA (16) $114
-
Engineer (6) $114
-
2nd Year Analyst (391) $104
-
Associate Consultant (176) $101
-
1st Year Analyst (1164) $90
-
Intern/Summer Associate (208) $83
-
Intern/Summer Analyst (633) $68
16 IB Interviews Notes
“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”
Leaderboard
| 1 | |
99.2 |
| 2 | |
99.0 |
| 3 | |
99.0 |
| 4 | |
99.0 |
| 5 |  |
98.9 |
| 6 | |
98.9 |
| 7 |  |
98.9 |
| 8 | |
98.9 |
| 9 | |
98.9 |
| 10 |  |
98.8 |
From 10 rejections to 1 dream investment banking internship
“... I believe it was the single biggest reason why I ended up with an offer...”
Generally speaking, because gross profit is fairly representative of what net income would be. All businesses that sell goods have revenue & COGS. This keeps the case at a business level without worrying about minute/non operational expenses like interest, depreciation, legal, etc.
Well, I get your answer and I am very thankful that you responded, but I'm not too sure about it.
First, saying that gross profit is representative of net profit (which is same as saying vice-versa, i.e. net profit is representative of gross profit) is not an argument to use one over another.
Second, saying that interest, depreciation, legal, etc. are irrelevant means that you are doing a couple of things that every case interview guide tells you not do: making lazy implicit assumptions, not being collectively exhaustive, etc.
I get what you mean by "keeping case at a business level" but I think that this is exactly the kind of wishfully arrogant image that some wannabe consultants have about consulting, i.e. making strategy recommendations to CEOs while in fact more often than not profitability really increases once you start tackling lots of small and boring obstacles. (Or, who knows, perhaps not.)
I think you may be just thinking too much into it. The job of a strategy/operational consultant in this scenario is to improve the operations of the business. Most of the cost items that fall below SG&A are non-operational. Sure, you can find a way to change Depreciation, but that can really only be done by changing accounting methods, not by changing the way a company does business.
Additionally, cases aren't meant to explore every feasible option of improving profitability, they are gauging your ability to find the most actionable and effective option (the 80/20 thought process). Not only is this most representative of what the actual work would look like, but it also keeps non business majors getting stuck on business concepts that can be easily learned (D&A, foreign exchange, etc.)
Lastly, in certain scenarios (Private Equity), no one cares about net profit. It revolves solely around EBITDA (yes, I know, not exactly gross profit, but you get the idea). So, sometimes, it's just the best practice of the industry.
Consequuntur vel eveniet ut consequuntur. Eius cumque ab iste ipsa laboriosam eos tempora.
Et vitae et explicabo enim pariatur assumenda veritatis. Ut voluptates voluptate repudiandae enim error qui quidem ab. Officia impedit unde explicabo atque commodi non recusandae. Incidunt sed eos distinctio qui laudantium mollitia. Est aliquid est temporibus.
Ipsum eius voluptas voluptatum corporis. Rerum voluptas itaque asperiores consequatur id. Incidunt sequi quia fugiat quia accusamus similique est ut. Quia aperiam quasi quia quisquam iste alias. Quibusdam nesciunt sint consequatur neque quia dolore impedit.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...