Question

Describe corporate social responsibility (CSR). How does crafting CSR impact a company's bottom line?

Assuming the following from company XYZ's financial statement, calculate the gross profit margins for each year (show your work). What do the gross profit margins tell you about company XYZ?

2015: Sales revenues —- $128,000. cost of goods sold = $82,000.

2014: Sales revenues —— $130,000. Cost of goods sold = $99,000.

Answer 1

CSR or corporate social responsibility is a strategy which or policy which companies use to make them accountable to itself, to stakeholders and to the public. It’s a self-regulating policy which helps companies to keep in check the impact they are having on the environment they are operating in. To make sure the impact is not negative on the environment. And the company is contributing positively in to its surrounding economic, social & environmental sphere.

CSR helps in building social brand for the company and also enhances its brand reputation and create positive outlook in the eyes of investors and customers which augurs well for the bottom-line enhancement. Although it is absolutely necessary that the CSR initiative are aligned with stakeholders priority and to the public perception or else the initiative aren’t worth any investment because it will come back to bite the company. Also it improves the meaningful engagement of the employees which contribute more to the organization and become more productive hence adding to the bottom-line comprehensively.

2015 Gross Profit Margin: Revenue – cost of goods sold => $128000 - $82000 = $46000

2016 Gross Profit Margin: Revenue – cost of goods sold => $130000 - $99000 = $31000

Although the revenue of the organization has improved year over year but the cost of operations has taken a toll on the bottom line which has decreased by $15000 year over year. The organization will have to tighten up its operations to show better margin in the future.