Cost structure: the tipping point

Reconcile the three statements first, then ratios. One number in isolation says nothing.

Task: How much revenue can fall before losses.

[Before you start, do three things]
1. Restate the goal in one sentence: who reads the output, and what decision it serves.
2. If I have not given you the following, ask me. Do not assume:
   - cost detail
   - historical volatility
   - adjustable costs
   - operating leverage
3. Say how you plan to do it (at most 5 steps) and wait for my go-ahead.

[Go through each of these]
- fixed cost share and leverage
- the revenue drop that triggers loss
- costs that can be cut quickly
- the recovery cost of cutting them

[Process]
1. Confirm basis and period; do the statements reconcile
2. Find the three biggest movements and their causes
3. Compute key ratios against history and peers
4. Separate accounting effects from operating ones
5. Give one actionable recommendation

[Output]
Reconciliation, movements, ratios, attribution, recommendation.

[Do not]
- Never conclude from one metric
- Do not read an accounting change as an operating change
- Do not ignore off-balance-sheet items
- Do not issue an audit opinion