3 ms·

I'm not sure what you mean, can you elaborate?

• PaulDavisThe1st 7y ago
  What he means is simple. Like at least 1 other poster, you seem to have considered the numbers I gave to represent capital investment: invest $100k, make $20k vs. invest $1M, make $50k. But that's not the scenario at all. The scenario is about sales, not capital investment. The point is that its very unlikely (for retail at least) that you need to invest $X of capital in order to sell $X of merchandise. The question about returns here is not about returns on capital investment, but profit margins on sales.
• Retric 7y ago
  Let’s say you’re a gas station. You need to spend 500k to get things running including buying 100k of gas. Every week rent and people’s salaries add up to 19k and you sell gas costing you 80k for 100k. So, after 1 week you have 20k in gas and 100 - 19 = 81k in cash. You need to spend 80k of that on more gas for text week resulting in a net profit of 1k or a 1% profit margin. But, repeat that for one year and you bought 80k x 52 weeks of gas = 4.16 million even though you only had 500k in capital. Further your profit margin might be low but your ROI was 52/500 or 10.4% which is not bad.