What is the right balance between fixed cost and variables cost? My take on this, there is no right balance but it depends on what stage the organization is in. Typically during start up, the business would have higher fixed cost but when the business grow their capacity and capture more market share the fixed cost ratio reduce.
This reduction will also have clear direction on the business profitability. When fixed cost ratio reduces business use their current asset more to generate income.
No comments:
Post a Comment