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"turnover is vanity, profit is sanity"
katy123
Posts: 365 Forumite
what exactly does this mean. Thanks I head it on dragon's den.
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Comments
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If you're running a business you may have an impressive amount of money coming into your business but if you're profit margin is low and/or running costs are high it will affect how much you make.
A similar expression used by golfers is "Drive for show, putt for dough"0 -
The full saying is "Turnover is vanity, profit is sanity but cash flow is king".
Majority of businessess fail through a failure to prepare detailed cashflow forecasts, and business plans. Rather than a lack of profitability or sales.
Increased sales whilst welcomed do create problems for a business.0 -
There is also "Profit Is A Myth, Cash Is Reality"
This means that you may be selling stuff and making, say, 50%, 75% or 100% profit margin but until you actually have the money in your hand profit margin means nothing.0 -
Turnover = £100m. Costs = £99m.
Turnover = £10m. Costs = £1m.
Amounts are fixed, no scope for change. Which would you prefer?0
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