Dr. Rees: Ruth, good to see you again. Why didn’t you call me when you were in Denver? We could have had dinner together.
Dr. Turner: Actually, I never made it to Denver this year. My husband and kids went up to our Vail condo twice, but I got stuck in Fort Lauderdale. I opened a new consulting practice this August and haven’t had any time for myself since.
Dr. Rees: I heard about it…Med…something…right?
Dr. Turner: Yes, Med. My husband chose the name.
Dr. Rees: I’ve thought about doing something like that. Are you making any money? I mean is it worth your time?
Dr. Turner: You wouldn’t believe it. I started by opening a bank account with $45,000, and my January bank statement has a balance of $100,000. Not bad for six months-all pure profit.
Dr. Rees: Maybe I’ll try it in Denver! Let’s have breakfast together tomorrow and you can fill me in on the details.
Comment on Dr. Turner’s statement that the difference between the opening bank balance ($45,000) and the January statement balance ($100,000) is pure profit.
Can someone please answer this question for me
Dr. Turner's statement implies that the difference between the opening bank balance of $45,000 and the January statement balance of $100,000 is considered pure profit. By definition, profit refers to the financial gain or benefit obtained after deducting expenses from revenue.
However, it's important to note that Dr. Turner's statement may not give a complete picture of the financial situation. Without further information on the expenses incurred, it is difficult to determine the true profit generated from the consulting practice. Other overhead costs such as office space, equipment, marketing, and staff salaries may have been excluded from the calculation. Therefore, it is advisable to ask Dr. Turner for a breakdown of expenses to gain a better understanding of the actual profit earned.
Dr. Turner's statement implies that she considers the difference between the opening bank balance of $45,000 and the January statement balance of $100,000 as pure profit. However, it's important to note that this might not necessarily be an accurate representation of the actual profit made by her consulting practice.
To properly assess the profitability of a business, it's necessary to take into account various factors, such as expenses, taxes, and other overhead costs. Without considering these factors, it is impossible to determine the true profit generated by the consulting practice.
To evaluate the profitability of a business accurately, one needs to calculate the net profit. This can be achieved by deducting all the expenses and costs associated with running the business from the total revenue generated.
In this case, since Dr. Turner only mentions the opening bank balance and January statement balance, it's impossible to determine the actual profit or the expenses/costs involved in running her consulting practice. Therefore, it is not accurate to claim that the entire difference between these two balances represents pure profit. A more comprehensive analysis is required to determine the actual profit of the consulting practice.