Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1920-03-31
TURNOVER AGAIN.

This article Is specially for retail
merchants-but others may set some
thing worth while from II.
The idea for this story came from
Atlanta. Ga This In how 1t came
about, A man. politician I think.
gave vent to Z violent TRADE against
prescription druggists. He had dis
covered that they made the--to him
outrageous profit Of 70 per cent
plus.
. In so many words he accused the
druggists Of Atlanta Of robbing the
public. But in the sublime conf
dence Of ignorance he overlooked the
little matter Of turnover.
Turnover is term meaning the
turn over Of merchandise invest
ment. For example. suppose I invest
1000 in merchandise and i sell 1t
for $4,000. II / sell $4,000 worth of
merchandise in the year, have a
turnover Of three times, for ! turn
over my original $4,000 three times.
Now suppose my expenses on each
turnover is $4,0o0-that means that
on each turnover I make $1,000 for
myself. On a three time turnover ]
make $4,000 for my years work.
You will agree that this Is a modest
living considering the business in
volved.
Now let us think Of pharmaceutic-
ais. The druggist has to stock a
very big varsity Of pharmaceuticals,
for he must be prepared to make up
every prescription which the doctors
send to him.
Some of these things may not be
then only a small portion Of the min
imum amount the druggist can buy.
The result is that to give service he
can turn over his investment in phar-
naceuticals only once a year.
On the basis Of the figures given
above the druggist would make only
81 900 profit at the end of the year.
for his investment would be turned
over once only. Think OF 1t! expect
ing the druggist 10 earn less than a
good stenographer or bookkeeper
earns. To make a decent return on
his money he must make a higher
percentage of profit. actually he
makes more profit. for the other de-
partments of his business, such as
candy, nave u rapid turnover.j
To make his $4,000 on a one-time
turnover (again assuming expenses
are $4,000 he would have to sell his
goods for :i7.3GG instead of $4,000.
In other words, he would have to
mark up his goods 20 per cent instead
Of the so per cent necessary for a
three time turnover.
The percentage Of profit depends on
the rate of turnover. II I sell bread
or newspapers, where my turnover is
s12 times a year, 1 can sell for a
fraction of the profit needed on
pharmaceuticals and even then make
more actual cash profit.
Suppose / sell a dollars worth of
bread a day and make only i cent
in bread and turn it over 312 times
a year (there are 312 business days
In the year." so that my dollar in
vested in bread earns me cent net
profit each day for 312 days in the
year. or in cash $3.12. The same dol
lar invested in pharmaceutical
would earn ony 10 cents out OF which
all expenses have to be paid.
A fruit vender may invest $25 In
bananas and hawk them along the
street and sell out every day. He
will make about IS net profit for his
days work. which is sac week
Multiply that by so and you find thai
the banana man gets $500 a year
for himself from his investment OF
$25.
This profit Is perfectly legitimate
just as is the profit Of 70 per cent OF
100 per cent which the druggist
makes an pharmaceut!cals.
Whenever you hear Of excessive
percentages OF profit ask what the
rate of turnover Is before passing
Judgment
If there is any phase of this mat
ter on which my readers would like
further discussion. write to me. I am
eager to discuss those angles Of bust
ness which will prove most helpful
to my readers.
Stolen Fruit.
From 1.-THE National Tent and AVN
ing Manufacturing Review" st
Paul, Mimi: