In a fast growing company, does an increase in the
company's sales necessarily imply an increase on the expense side as
well?

Yes, if we are talking about a classical production company. As long
as each item sold cost anything to produce, costs must rise.  Basides,
in a fast growing company, sales and adminstrative staff can be
expected to increase.

A company in the service area would also have to increase staff to increase sales.

An successful internet company, however, could increase its turnover
without increasing expenses.

What do you mean in your second sentense> "As long
as each item sold cost anything to produce, costs must rise."

If you sell more widgets, you have to produce more widgets, thus
increasing costs/expenses.

However in our high tech world... if you are selling the right to
download software then your additional costs will be almost $0 per
unit.  The only real cost I can think of involved directly with
selling the product would be server size.

Jack --

Even an electronic transaction has costs, even if only for bank
processing charges.  It's a V-E-R-Y rare example where costs don't
rise with sales.

However, the real issue at hand is "how fast do costs rise with
sales"?  Each industry has different competitive dynamics that results
in different costs for increasing sales.

If we were looking for a counter-example, we'd be better off using an
established company which is changing channels or sales methods.  The
best single example that I can think of to demonstrate this would be
Dell Computer, which uses direct sales people to reach the Fortune
500.  However, the advent of the Internet gave the company broader
reach into the largest accounts and MAY have actually been able to
reduce sales costs to companies like Boeing, Coca-Cola, General Motors
and others.  But even here I'd be skeptical about a reduction in total
expenses, expecting a reduction in per-unit sales costs but not in
TOTAL sales expense.

Best regards,

Omnivorous-GA