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Michael struggles to understand the profitability terms used by Kevin, thereby slowing him. This case includes the main profitability concepts tested in McKinsey interviews.
Michael struggles to use the data provided by Kevin to produce a more tailored approach. He presents a useful, but basic, framework.
Kevin focuses on the profitability calculations but is more interested in the business implication insights Michael can extract from the answers. Business judgment is vital.
To answer this question, Michael needs to understand the difference between “estimated” and “average” gross margin, and what that would mean for a buyer.