Business FinancesQuestion 1211 of 1605
A contractor's gross profit margin has fallen from 30% to 22% over a year. The most useful first step to diagnose why is to:
a.Review job-cost reports to see whether labor, materials, or subs are overrunning estimates
b.Pay the franchise tax early
c.Increase the contractor's bond
d.Stop keeping job-cost records
Explanation
A declining gross margin signals that direct costs are eating into revenue. Reviewing job-cost reports pinpoints whether labor hours, material prices, or subcontractor costs are exceeding estimates, so the contractor can correct estimating or field performance.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)