CFO Impacts - Economics and Finance

Let’s use an imaginary case of an emergency services firm, Emergency Services Inc.

Its object is to provide emergency service on a for hire basis.  The CFO of this firm is looking at a particular example to see if much can be learned from that example that might be applied across the enterprise.

For example: the firm operates a fleet of emergency vehicles complete with all supplies it might need to cover a 10 service event 12 hour shift, including appropriate staff.  Each vehicle has an AM and a PM shift.

For whatever reason the PM shift is busier than the AM shift.  In fact the AM shift is often not asked to provide any intervention service at all while the PM shift often uses all its supplies required to rescue 10 individuals.  Occasionally, the AM shift rescues no one while the PM shift rescues as many as 20 individuals, having to replenish its supplies by purchasing them from medical service centres near its theatre of activity.  

The fees earned for the service vehicles are $13,000 per shift, active or on standby.  A full set of supplies costs $3,000 per vehicle.

The CFO has to report to the annual board and shareholders meeting.  Both the board and the shareholders are looking for an increase in dividends and share buybacks to improve their return on investment.  

The CFO is contemplating the possibility of staff reductions.  It seems obvious to him that he can raise productivity by laying off the PM shift. CFO’s know that increase in productivity will be reflected in improvement in share price and earnings per share.

What is the rationale the CFO is using?

Just a thought.  Thanks for reading this.

M G Klein April 22, 2025