See: Factor.
Your 18 miles of denim cost a fortune. You know you can sell it. Huge demand through your network of websites, JeanJeanJeans.com and LittleJeanieLovedElton.com. But you can't afford to stock the denim on your own without getting funding for that inventory. So you see a bank that looks at your advanced orders, audits your history, looks at your website traffic conversion metrics, and then decides whether or not it'll loan you the money to buy the 18 miles or not.
If it does, it'll be expensive. There's a ton of risk to funding inventory. But if the bank charges you, say 12% interest, and you actually pay off all the $20 million they loaned you on money that cost them 2% to rent from The Fed, they'll have made 10% interest on $20 million, or a cool 2 meg...a transaction worth singing about.
"Hey, Little Jeanie, you got so much time...and I want you to be my acrobat..."
Related or Semi-related Video
Finance: What is inventory?2 Views
Finance allah shmoop What is inventory Well it's Just stuff
you have for sale in one form or another An
auto dealer Well all those cars she has sitting out
there in the sun is a dive bombing targets for
the birds Yeah while their inventory to the car dealership
the cars are inventory the loads of nose hair trimmers
sitting on the shelves at the well appointed nostril fine
store best nostril trimming store in the world Yet their
inventory albeit kind of gross ish inventory especially after use
the four thousand yards of denim cloth sitting in the
weaving factory waiting for thirteen year old girls in thailand
toe weave it all together to make levi's for the
gap Yep that cloth is inventory It isn't finished inventory
It's just a work in process not yet ready for
prime time or a prime thigh or whatever But it's
an asset for the company who owns it and it
is held as inventory on the balance sheet Work in
process right there at the balance sheet right there Okay
And when that inventory is sold and turned into revenues
it'll just become part of the expenses line on the
income statement usually has cost of goods sold or caw
Gse that's What people in the accounting bids say Cocks
thie Inventory is a good but inventory is always good
Of course as many a customer has learned after taking
a hefty shock straight to the hunger And that hurts
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