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Mastering The Market Cycle

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The Cycle In Profits

The process that determines a company's profits is complex and multivariate. The economic cycle profoundly affects some companies' sales but less on others. Primarily because of differences in operating and financial leverage, a given percentage change in sales has a much more significant impact on profits for some companies than others. 


The linkage between economic growth and profit growth is highly imperfect because the movements of the economic cycle aren't the only thing that influences sales and also because a change in sales doesn't necessarily result in an equivalent change in profits. 

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Units 6/18