Free Market Capitalism
The
Inventory Turnover Secret
90 DAY INVENTORY TURNOVER:
Wealth building is essential
for a Free Market Economy to prosper. As business sales grow, profits increase.
As profits increase, employment and wages grow. Simultaneously government expands it tax
base. Wealth is the by product of this business cycle. Because
businesses have to turn their inventory over multiple times a year, the profits
generated from each sales cycle can be up to 52 times a year. Without the
creation of wealth our economy would collapse.
Example
1 - A retailer has quarterly sales of $10 million. After paying
operating expenses and taxes, the company earns a 5% net profit every 90 days.
At the end of one year, the company will have earned $2 million on $10 million -
a 20% a year return on its capital - not bad.
If $10 million were
deposited in a bank at today's rates of 2%, the interest earned would be only
$200,000 by the end of 12 months.
Example 2 - A supermarket
turns over its inventory every week. Its sales every week to repeat
customers are $1 million. After paying operating expenses and taxes, the
company earns a 3% net profit every week on $1 million. At the end of one
year (52 weeks), the company will have earned $1.56 million on its original $1
million - a 156% a year return on its capital - WOW! If $1 million were deposited in
a bank at today's rates of 2%, the interest earned would be only $20,000 by the
end of 12 months.
Only free market capitalism can create wealth in this way. Entrepreneurs,
business owners and willing individuals can create wealth to benefit themselves
and their employees.
Markets Global's mission is to help clients prosper by building
wealth successfully and creatively.
