Jasz
VIP Contributor
Organizational earning management is a set of systems and processes that help ensure that organizations earn the right to their profits. Earnings are simply the difference between revenue and expenses. Organizational earning management ensures that organizations earn the right to their profits by balancing these two elements, which is called cost control.
Organizational earning management involves ensuring that an organization’s costs are controlled and that revenues exceed costs. This involves making sure every dollar earned by an organization goes back into the business in some way, shape or form.
In order to do this, organizations must be able to identify where their expenses are coming from and how much they cost. If there is money left over after all expenses have been paid, then it should be reinvested into the business in some way such as expanding capacity or adding new products or services.
The term earnings management is sometimes used synonymously with cost management, but it has a wider
meaning that includes all aspects of profit maximization, including:
Cost reduction – reducing the cost of producing a product or service.
Product mix – changing the mix of products or services to achieve higher sales or lower prices.
Marketing mix – changing the mix of promotion, pricing and distribution channels to achieve higher sales or lower prices (in other words, they are changing their marketing mix).
Sales force organization – changing the number and size of salesperson teams to achieve higher sales or lower prices (in other words they are changing their sales force organization).
Organizational earning management involves ensuring that an organization’s costs are controlled and that revenues exceed costs. This involves making sure every dollar earned by an organization goes back into the business in some way, shape or form.
In order to do this, organizations must be able to identify where their expenses are coming from and how much they cost. If there is money left over after all expenses have been paid, then it should be reinvested into the business in some way such as expanding capacity or adding new products or services.
The term earnings management is sometimes used synonymously with cost management, but it has a wider
meaning that includes all aspects of profit maximization, including:
Cost reduction – reducing the cost of producing a product or service.
Product mix – changing the mix of products or services to achieve higher sales or lower prices.
Marketing mix – changing the mix of promotion, pricing and distribution channels to achieve higher sales or lower prices (in other words, they are changing their marketing mix).
Sales force organization – changing the number and size of salesperson teams to achieve higher sales or lower prices (in other words they are changing their sales force organization).
