FESH, Here's your formula (below). (This is really ridiculous I can't believe you really think this has any foundation)
Both scenarios have the same revenue, same begining inventory, same purchases... the only difference is ending inventory - which means CSCO would sell more inventory off but get no incremental revenue from it. Of course margins are lower in this case - like DUH! Please tell me I'm missing something because if I'm not then I think our discussion can end here. Please tell me why CSCO would sell more inventory and get no revenue from it.
You actually elude to the fact that CSCO adjusts/manipulates inventories to generate gross profit. This is ludicrous. If you really believe that then you have spent no time running any business... not even a coffee shop.
OG
****************
SALES 6,519
COST OF SALES CALCULATION:
BEGINNING INVENTORY 1,232 JULY 29,2000
PURCHASES 3,102
=COST OF GOODS AVAILABLE 4,334
LESS:ENDING INVENTORY 1,956 OCT 28,2000
COST OF GOODS SOLD 2,378
GROSS PROFIT 63.5% 4,141 REPORTED BY CISCO
Now if inventory grows 15% instead of 58% this is what gross profit looks like:
Sales 6,519
Beginning inventory 1,232
+purchases 3,102
=cost of goods available 4,334
-Ending inventory 1,416 PLAY WITH THIS NUMBER
=cost of goods sold 2,918
Gross profit 55.2% 3,601 REPORTED BY THE DISCIPLE
VOILA MAGIC !!
Just change the ending inventory higher and your profits are whatever you want them to do. |
