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Given a profit or loss statement for current year and prior year, how can i come up with the strategies used to improve performance of a company?
That’s hard to do by simply looking at two P&L accounts as these record what has happened rather than why it has happened.
Let’s say the GP% has fallen. The P&L accounts will not show whether this is because sales prices have come under pressure or costs have gone up. Saying that the company should improve its GP% is not a strategy as it does not tell the company how to.
Similarly, if expenses as a percentage of sales has increased, the P&L will show thìs but won’t explain the cause: could be poor management, moving to more expensive premises or hiring IT people to develop the website. If you don’t know what caused a decline in performance you don’t know, say, how to reverse it
You need to look at information elsewhere in the question.
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