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Funny story: In 5th grade, on career day, the proprietor of an Army-Navy Surplus store explained margin to me: I buy a shirt for $7, sell it for $10, and get $
by fyi80 13y ago
Funny story: In 5th grade, on career day, the proprietor of an Army-Navy Surplus store explained margin to me:
I buy a shirt for $7, sell it for $10, and get $3 dollars profit and $7 to buy another shirt.
I was genuinely confused about the $10-3=$7 he was claiming he could use to buy more shirts, when it was already used to pay wholesale for the first shirt.
But maybe that was confusion about Return on Invested Capital, not confusion about margin.
- unclebucknasty 13y agoOr maybe the guy went out of business the next week and is still trying to figure out what happened.
- apalmer 13y agoI see your point, I guess its all in how you do your accounting. One way of looking at it is the initial $7 dollars is already sunk costs, and quite literally he probably was using the $7 dollars from Shirt A's sale to purchase Shirt B. I mean he didn't really literally take the $7 dollars from the sale of Shirt A to buy Shirt A so I can see why he thought that way. Does it make sense to run a business with that mindset i don't know...