The two questions "did I make money" and "do I have money" have different answers, and a business can fail while the first one is yes.
Spending $5,000 on inventory does not reduce your profit by $5,000. You swapped cash for an asset of the same value. Profit only moves when that stock sells, and only by the margin. A month where you restocked heavily looks terrible in the bank and fine on paper — both readings are correct.
Money a reseller puts down before taking stock is their money that you are holding. It is cash in and a liability at the same time. Counting it as revenue inflates a month and leaves you owing product you have already spent the money on.
| Profit | Cash | |
|---|---|---|
| Buying stock | no effect | money out |
| Selling stock | margin earned | only when paid |
| Reseller deposit | no effect | money in |
| Supplier refund | lowers your cost | money in |
| Store credit | lowers your cost | no effect |
That last row is the one that catches people. A supplier who makes a bad batch good with credit has repaired your profit and given you no cash. Treat the two identically and your cash position will read higher than your bank.
In the app
Every figure on this page is something PepStock keeps without being asked — landed cost per batch, each purchase's own cost, what every reseller is holding, and the per-mg ranking at one kit and at ten.
