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
4 - The judgment of balance
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
2 is not equal to 3, not even for large values of 2.
Grabel's LawPerceptive readers may have noticed that in the previous chapter I violated one of the Rules of Engagement listed in Figure 3.1: ‘Closed System: No pipes lead outside the bathroom. All pipes connect from one tank of water to another, or sometimes with another pipe.’ That violation was a temporary convenience and we now need to correct it in this chapter.
Figure 4.1 represents a simple but slightly unusual business. Imagine an itinerant fruit-seller who one day discovers a grove of oranges growing wild in the forest. She believes that they are growing on common land and that therefore anyone is entitled to pick them. It is a heaven-sent opportunity and she rapidly turns it into a going concern with her brother. He drives them to the site each day and they set up a stall by the side of the road. He picks the oranges off the trees and she sells them to the drivers passing by.
Most of the drivers pay in cash, and that cash therefore represents a 100 per cent profit for the business, because these wild oranges cost her nothing and she has no other expenses. But sooner or later the inevitable happens: an executive limousine screeches to a halt and puts in a request for a large consignment. She accepts this with delight, but there's just one snag: its driver has run out of cash.
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- Information
- Financial Management for BusinessCracking the Hidden Code, pp. 25 - 31Publisher: Cambridge University PressPrint publication year: 2010