Book contents
- Frontmatter
- Contents
- List of figures
- Introduction
- Acknowledgements
- Part 1 A dream of future wealth
- 1 Income and outcome
- 2 Fool's gold
- 3 Play the game
- 4 The judgment of balance
- 5 Return to reality
- 6 The cost of success
- 7 Profit and cash
- 8 Time to take stock
- 9 A capital asset
- 10 Mind your own business
- 11 The taxonomy of fog
- 12 The Merchant of Florence
- Part 2 The hidden art of management
- Appendix 1 Mathematical anchor
- Appendix 2 Getting to grips with cash
- Postscript
- Bibliography
- Index
9 - A capital asset
from Part 1 - A dream of future wealth
Published online by Cambridge University Press: 05 June 2014
- Frontmatter
- Contents
- List of figures
- Introduction
- Acknowledgements
- Part 1 A dream of future wealth
- 1 Income and outcome
- 2 Fool's gold
- 3 Play the game
- 4 The judgment of balance
- 5 Return to reality
- 6 The cost of success
- 7 Profit and cash
- 8 Time to take stock
- 9 A capital asset
- 10 Mind your own business
- 11 The taxonomy of fog
- 12 The Merchant of Florence
- Part 2 The hidden art of management
- Appendix 1 Mathematical anchor
- Appendix 2 Getting to grips with cash
- Postscript
- Bibliography
- Index
Summary
Capital is money, capital is commodities … By virtue of being value, it has acquired the occult ability to add value to itself. It brings forth living offspring, or at least lays golden eggs.
Karl MarxGeronimo spends the next day building a new fruit stall for Ursulina. He creates some lockable storage compartments in the back for unsold oranges and to save them the trouble of packing it up and taking it home every day, he buys a chain and padlock to secure it to a nearby tree.
Meanwhile, dazzled by the possibilities of Moisture Control Technology, Ursulina invests in a portable refrigerator that they can run off their car battery. Their total investment in this equipment corresponds to several weeks' sales of oranges and although they pay for it by credit card, they will have to repay this debt from their bank account at the end of the month. How can we represent this in the Business Flight Simulator?
In Figure 9.1 I have introduced a new box called Fixed Assets to represent this activity. Into it flows a new pipe called Spend on capital and out of it runs a new (rather thin) pipe called Depreciation. To make the model more complete I have also added a new pipe called Expenses. It is easiest to explain the operation of all these when the simulation is running, so please go to www.fm-fb.com and choose Model 107 (or click on the diagram).
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- Financial Management for BusinessCracking the Hidden Code, pp. 52 - 55Publisher: Cambridge University PressPrint publication year: 2010