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Given that labor costs are the single largest expense for these types of business it's not unreasonable to reach the conclusion of those she's rebutting with th
by bokonist 13y ago
Given that labor costs are the single largest expense for these types of business it's not unreasonable to reach the conclusion of those she's rebutting with this article.
Whaaaa? The largest expense, by far, is most certainly cost of goods sold.
- robryan 13y agoI wouldn't really consider them an expense in the same way as labour costs. Maybe in terms of the costs of distribution and storage for things that aren't moving. Things that are moving though with a profit margin aren't really a cost center.
- eru 13y agoOh, but you still have to pay interest on that tied up capital. (I.e. the faster you move your inventory, the cheaper it gets.)
- deleted 13y ago[deleted]
- mseebach 13y agoIn bookkeeping, no, but in looking for opportunities for efficiencies, it's pretty relevant. Say, you've got a single employee on a $60k salary moving goods worth $10mm, but at a razor thin margin, so your profit on the goods is $100k, and your net profit is $40k. If you want to increase your net profit, it would probably be easier and yield a bigger return to see if you can do something about your $9.9mm product expense than your $60k salary expense.