How would you explain that HP reported profits soaring 11% on 8% decline in revenues? - - I specifically invite answers from business owners and managers who know better what such paradoxes could usually indicate
by 
Alexander
ANSWERS: 4
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Cutting costs, increasing margins, reducing overheads.
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Cutting costs at a greater rate than the decline in sales. Also maybe the previous results were extraordinarily low for some reason which no longer applies (re-organisation costs/takeover costs/re-dundancy costs etc.)
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I know nothing about HP so this is only hypothetical. also, I have run several medium sized businesses so am familiar with some of the issues but am not an expert! There are many possibilities. Since everyone is doing their best to cut costs etc. and competition is high, I would look for one off windfall profits. For example, they may have had plants, machinery subsidiaries that were undervalued on the books that they have sold. The difference between the book value and the price they got is shown as a profit (or a loss). In some jurisdictions it is also possible to revalue depreciated assets without selling them. Briefly, it is assumed that the value of an asset will decrease as it ages and eventualy you are left with salvage value. This may be well below the actual market value. Where allowed, you can increase the value on the books to relect its actual value. This increase shows up on the balance sheet as a profit.
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Why couldn't they be bothered to do so before?
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