Deal economics
Maximum acquisition offer
Maximum offer = expected realizable value − C_lot − uncertainty reserve − target lot contribution Expected realizable value reflects the lot’s mix, condition, and buyer evidence—not optimistic listings.C_lot is the whole lot’s modeled selling and fulfillment cost, including labor and an
explicit loss allowance. Uncertainty reserve covers forecast error not already counted;
target lot contribution is the reader-chosen minimum contribution after those allowances, not
net profit. Chapter 2.1 has the full worksheet.
Selling cost and contribution
In this section, letR_order be modeled order revenue, C_order the total modeled selling and
fulfillment cost, and Q the recorded inventory acquisition cost.
C_order = price-linked venue charge + per-order venue charge + postage + supplies + loss
allowance + labor + allocated fixed cost
Cost rate = C_order ÷ R_order
Modeled sale contribution = R_order − Q − C_order
For a one-order lot, C_lot = C_order. For several expected orders, sum consistently scoped
C_order models and any lot-level cost not already allocated; do not count a component twice.
Calculate the cost rate only when R_order > 0; at zero revenue, the rate is not computable.
Contribution is a management result for the modeled sale, not net profit or taxable income.
Verify changing inputs such as fees and postage for the exact account and transaction,
then record their source and date. Chapter 2.2 shows the complete worksheet.
Price floor
For Chapter 2.4’s simple case, letP be sale price, Q recorded inventory acquisition cost,
v a verified price-linked rate applied directly to P, d the modeled dollar costs that do
not change with P, and G the minimum dollar contribution required by your policy.
Modeled contribution(P) = P − (v × P) − d − Q
Floor = (Q + d + G) ÷ (1 − v)
Use the shortcut only when 0 ≤ v < 1 and the rate really applies to P. If the fee base
includes shipping or other amounts, solve from the full cost function instead. A floor protects
the chosen contribution requirement; it does not establish market value or guarantee a sale.
Cash and inventory movement
Deployable business cash
Chapter 5.2 letsB be reconciled cleared business cash, K named near-term commitments still
included in that balance, and R_cash additional protected operating cash still inside B and
not already counted in K. All three are nonnegative and use the same date, currency, and set of
included business accounts.
Deployable business cash = max(0, B − K − R_cash)
Pending payouts and unused credit are not cleared cash. Household money is outside this
calculation. Do not subtract cash already outside B, and count no obligation in both K and
R_cash.
Inventory movement
Chapter 2.3 measures inventory movement over one stated period and one cost basis: Average inventory at cost = (opening inventory at cost + closing inventory at cost) ÷ 2 Inventory turns = inventory cost of items sold during the period ÷ average inventory at cost for the same period Calculate turns only when average inventory at cost is greater than zero; otherwise record it as not computable. There is no course-wide healthy turn rate. Compare like periods, then use age and cash needs to decide what deserves review.Capacity and limits
Completion capacity and backlog
Chapter 4.3 uses one workflow unit throughout a capacity calculation. Baseline weeks must be greater than zero; zero completed units is valid and produces zero weekly capacity. Weekly completion capacity = units made sale-ready and findable ÷ weeks in the baseline period Net backlog change for the review period = units received + units returned to the workflow for rework − units made sale-ready and findable − other recorded exits during that same period Add returned rework only after a prior valid completion; failed first-pass work stays in the queue. Name every other exit and count each event once. Backlog weeks = queued units ÷ weekly completion capacity If capacity is zero, backlog weeks is not computable. Pause intake and inspect the workflow instead of dividing by zero.Purchase ceiling
For a single purchase, Chapter 5.2 letsp be a reader-chosen share from 0 through 1. The
optional fixed cap F and remaining lane capacity are nonnegative dollar limits in the same
currency as deployable business cash.
Remaining lane capacity = max(0, lane total cap − current lane allocation)
Without a fixed cap: maximum permitted purchase = min(p × deployable business cash, remaining
lane capacity)
With a fixed cap: maximum permitted purchase = min(p × deployable business cash, F, remaining
lane capacity)
Passing this ceiling does not make a purchase safe; all remaining capital-policy gates still
apply, including the cash-backing test when a credit instrument is used.
Minimum policy record
The math works only while its assumptions remain visible. Record:- the decision and exact scope it governs;
- the applicable measurement basis, date or period, and current status or value;
- the boundary or trigger and the response when crossed;
- the person who can act or approve an exception;
- the source, exact scope, check date, and recheck trigger for any external rule or volatile input;
- the next review date and the event that forces an earlier review.