Business & Accounting Foundations

Sound business decisions usually fail for one of two reasons: the wrong metric is used to answer the question, or the right metric is fed incoherent inputs. Pricing, margins, and working-capital timing are the core loop that determines whether a business can sustain itself, scale safely, and survive pressure without constantly improvising. Break-even thinking clarifies the minimum volume required to stop subsidising operations with hope, founder effort, or delayed payments, and it immediately exposes how discounts, cost increases, or fixed-expense creep change the implied sales commitment. Contribution margin removes the illusion that revenue equals health by isolating what each sale actually leaves to cover fixed costs, making it the practical metric for deciding what to push, what to bundle, and what to stop selling. Gross margin then answers the product-level question: after direct costs, is there enough structural room to run the business at all, or is the model dependent on optimism, hidden labour, or accounting classifications that flatter results. Net margin is the reality check that shows what remains after the full operating burden, highlighting whether growth is building a durable engine or just increasing complexity and risk. Confusion is common because markup and margin are casually treated as the same thing, even though one is anchored to cost and the other to selling price, and mixing them produces pricing rules that look consistent while silently failing to fund overhead. Cost of goods sold sits underneath that entire logic; if COGS is misclassified, margin analysis becomes fiction, and pricing decisions become reactive rather than controlled. From there, the cash dimension takes over: inventory turnover and days inventory outstanding translate stocking choices into speed and time, showing whether cash is trapped in slow movers or whether turnover is artificially high due to stockouts and missed demand. Accounts receivable days makes the gap between booked revenue and available cash measurable, which is where profitable businesses often break, while accounts payable days frames how payment behaviour affects liquidity, supplier trust, pricing, and continuity of supply. If you want the full, expanded reference version that explains how these measures connect and how to interpret them without self-deception, use the SnapCalc hub page: Business & Accounting Foundations.