We believe that limiting of fixed costs by Ford through their agreement with UAW will reduce their selling, general and administrative costs as a percentage of its revenues over medium-term, which could provide upside to its stock.
FORBES: Ford Stock Motors Toward $15 With New UAW Deal, Ratings Upgrade
He sees synergies in general and administrative costs, in manufacturing and also in research and development.
Most of Dell's expenses are made up of selling, general and administrative costs rather than research and development.
General and administrative costs have also defied expectations of economics of scale, hanging in at 15% of revenue.
After so many cuts Dynegy's general and administrative costs, at 3% of revenues, are the lowest among generating firms.
Sales declined 5% in the first quarter from the same time last year, but marketing, general and administrative costs rose 30%.
We believe this could help lift the Ford stock as this will reduce its selling, general and administrative costs as a percentage of its revenues over the next four-years.
However, if an investor had purchased stock in the 30 components of the Dow in 1990 that were all deploying ERP, that investor would have benefited from a 35% decline in General and Administrative costs as a percentage of revenues, a five-fold increase in revenues as automation enabled massive scale, and an almost eight-fold increase in market cap.
For the expense figure, take the "general and administrative" costs disclosed on the income statement.
Operating expenses, however, rose to 15% from 12.6% of income and selling, general, and administrative costs rose to 13.7% from 11.5% of income.
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While these savings are expected to come largely from organizational streamlining, the company will also target areas such as real estate, information technology, product and service procurement costs, overall general and administrative expenses, and a significant reduction of suppliers in order to further lower costs and improve quality.
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Sales and marketing costs and general, administrative and other expenses merely compound the losses.
Still, gross profit declined 2%, principally due to increased building material costs and selling, general and administrative expense rose 14%, primarily due to investments in personnel and other expenses related to plans for growth, including the start-up of its Lexington, Ky.
Selling, general, and administrative expenses as well as manufacturing fixed costs were kept well under control, while the quarter was burdened by temporary inefficiencies related to the volume drop and an inventory reduction.
Earnings, however, decreased 37% because of higher selling, general and administrative expenses and a near doubling of research and development costs.
Appeals, contestations, audit cost (both provider and insurer driven), reconciliations, contract loading, software license costs, as well as general administration, network development, marketing, commissions and profit all are major factors why private insurance administrative costs are higher.
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