THIS CATCHES EVERYBODY.
Ask a friend how many penny stamps make a dozen? He will reply, “Why, twelve, of course.” Then ask again, “Well, how many half-penny ones?” He is almost sure to reply, “Twenty-four.”
Before he settles his account with nature, man charges the debit of his profit and loss account to Fate, but the credit he takes to himself.
THE PUZZLE ABOUT THE “PROFITS.”
Perhaps there is no form of commercial calculation so confusing and so little understood as that of mercantile profits. It might surprise many to state, nevertheless it is perfectly true, that it is impossible to buy goods and sell them to show a profit as great as 100 per cent.
The correct method to calculate profit is to reckon on the return—the price received for the goods sold—not on the cost price, and as it is impossible to sell goods at 100 per cent. discount, so also goods cannot be sold to show that percentage of profit, unless they actually cost nothing.
Some time ago, in New Zealand, a well-known boot manufacturer had a “GREAT DISCOUNT SALE.“ He had large posters displayed on the windows of his shops, and advertisements in the newspapers, announcing the fact that 5s. in the £ would be allowed as discount to all customers. The profit he usually obtained in the ordinary way of trade was 25 per cent., and having had a good season, he was prepared to sell off the balance of his stock at cost price. The selling price of his goods was marked in plain figures. A pair of boots which cost him 8s. was marked 10s., thus showing a profit of 2s., which he considered to be 25 per cent. (2s. being a quarter of 8s.) Instructions were issued to all his employees engaged in selling to deduct a quarter from the marked price, the result being that a pair of boots which cost 8s., and marked 10s., was being sold at 7s. 6d. (2s. 6d., the quarter of the marked price being deducted from 10s.) Although he imagined he was getting 25 per cent. profit, he was in reality receiving only 20 per cent. It was not long before the posters were altered, announcing that 4s. in the £ would be allowed to his customers.