The material suggests that the measured utilization is unusually low and may threaten sustainability unless adjusted. This statement relates to which principle?

• A. Revenue growth must always precede cost control.
• B. Labor efficiency determines client billing potential.
• C. Utilization must be evaluated together with paid time off and billed hours.
• D. Office size determines profitability.

Answer: (C)

Utilization must be interpreted in the context of both paid time off and billed hours. When measured utilization looks low, it can be misleading if you don’t account for PTO and other non-billable time that reduces the hours available for client work. By evaluating utilization together with paid time off and the actual billed hours, you get a true sense of capacity and sustainability—how much productive, billable time the firm can rely on and where adjustments (staffing, workload, or scheduling) might be needed. The other options miss this core point: they focus on revenue or office size or on a different efficiency relationship, but they don’t address calculating utilization with PTO in mind.