Here is something to ponder. You have two business's one is selling cars the other is the selling of high end watches and I'm talking watches worth over $10,000 a piece.
The average car for argument is worth the same. The car and the watches are both purchased on credit at the same rate. The cars volume is twice of the watches volume due to demand for a low priced car of that for a high priced watch.
What is the better business to be in.
Remember you have to include your retail space to the capital owed that bears no interest to keep it easy for our purpose as well we will say the floor cost to the retailer is the same for our purpose.
Without making it to complicated the watch maker is making more money due to the shelf cost he is getting on the watches cause there is little retail space required to display the watch as to displaying the car even at twice the sales volume.
Treasury cost is a very important cost when breaking down the capital surplus cost as well the portion of the liability that undertakes this cost. Retail floor space cost is a fixed cost due to charge back interest cost to the retailer that when paid is part of the appreciated cost that off sets depreciated costs.
The web that can be weaved in accounting can boggle a average mortles mind when it comes to figuring out if a company is profitable or not and due to equality of all who invest regardless of education they have taken the task of speculation as well the financial jargon and the hiring of accountants out of the equation by introducing the balance sheet formula where all familiar with that supports your very basic algebra formula we all have been introduced in the required grade eight completion for every North American citizen.
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