| FINANCIAL BUSINESS RECEIVABLES (FACTORING) - contin. |
| Business 101: Every business has fixed costs (overhead - rent, base salaries, phone, equipment leases, etc.) whether it sells any goods or services or not. Beyond that, each product or service costs a certain amount more, your variable cost. Going back to our Megastore X example, let's assume that your company's fixed costs are $25,000 per month, and that your variable costs are 50% of your sales price. Given this, your Megastore X order of $50,000 would cover the $25,000 fixed cost, plus another $25,000 of variable cost (50% of the $50,000 order), leaving the company with a profit of $0.00. |
