## Forum Posts

ziaur zia

Apr 12, 2022

In Welcome to the Forum

For example, if you open a restaurant, after calculation, 1,000 people pass by the door every day - these 1,000 people are the natural traffic of your store; then enter your store to generate There are 400 people with consumption behavior—the conversion rate of your store is 40% at this time; the last 400 people spend an average of 100 yuan each—the unit price per customer is 100 people. Therefore, the daily sales of your store is 1000*40%*100=40,000 yuan (for a restaurant, this is a great sales). With that said, I believe you should understand. B: Next, look at the second formula: "Profit = Revenue - Cost". This formula is also easy for many of us to understand. It is how much you earn in total, then subtract all costs, and the rest is your profit. income, as mentioned above. Regarding the cost, I will talk about it later, and I will not go into details here. C: Look at the last formula: "Return on Equity = Profit Margin * Asset Turnover". Compared with the above two formulas, this formula is rarely used and more difficult to understand. (The derivation formula in front of this formula is too long, so I will not write the derivation process. Interested readers can check it online.) What is "return on equity"? This indicator can reflect the ability of the fax number list company's own capital to obtain net income. Simply put, it is how much money you put in and how much money you get back in the end. The same is to earn 100,000 yuan, A invests 1 million yuan, and B invests 10 million yuan. Who do you think is more powerful? This result can come from two aspects. One is the profit rate. For example, if a pair of shoes sells for 300 yuan, after deducting all costs, the profit is 50 yuan, then your profit rate is 50/300=16.67%. Another variable is the "asset turnover rate", which is also the part I will talk about next. For example, A and B have the same capital of 1 million, but A turns over 10 times in a month, and B only turns over once, then it is obvious that the asset turnover rate of A is higher than that of B. Through the above simple explanation, we understand the basic meaning of these three formulas, and we should also understand what the basic profit logic of the enterprise is. Through these three formulas, we want to achieve the ultimate profitability of the enterprise (increase profit or return on assets), and have the following five basic directions: Increase the number of users Customer unit price (user value) Cost management

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# ziaur zia

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