Customer profitability: who loses money

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

Task: Many customers and no idea which are profitable.

[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:
   - revenue and service cost
   - terms and collection
   - customisation
   - returns and complaints
3. Say how you plan to do it (at most 5 steps) and wait for my go-ahead.

[Go through each of these]
- allocate service cost and capital tied up
- flag high-revenue low-profit customers
- three responses: raise price, reduce service, exit
- limits of the allocation method

[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