Case type 02
Profitability
The most common case type. Diagnosing why profit has fallen and how to improve it, narrowing to the real driver through revenue, cost, and contribution, and asking for facts instead of assuming them.
25 min1 lesson Last reviewed
Start the lesson Diagnosing a profit decline: the reference case
How do you approach a profitability case?
- Split profit into revenue and cost, find which side moved and by how much, then dig into the driver inside it (price, volume, mix, fixed or variable cost) before you recommend anything.
- The most common mistake: listing every possible cause instead of using the numbers to find where the problem is.
- In many offices, interviewer-led versions (common at McKinsey) hand you the prompt and the exhibit and ask pointed questions in order.
By the end you will be able to
- Diagnose a profit decline down to its real driver
- Use the profit tree as a tool, tailored to the business
- Split revenue changes into price and volume, and use contribution and break-even
- Deliver a quantified recommendation with risks and next steps
Worked cases in this module
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Common questions: Profitability
Key terms