Lets talk business profit and loss!!!

Ok when i went to sleep last night this thought came to my mind and thought about posting it

What is a profit? A profit is what you earn extra after recovering your expenditures ... right? And if there are any losses they would be deducted before you calculate a profit as you will have to spend extra to cover that loss and that would come in expense too!

As per what was said in Thursday's epi the contract Mohan has with the franchise is "60% share in profit!" So wouldn't he be paying the company 60% of profit which would be calculated after deducting the loss automatically ... because he is not bound to pay them profit as in a certain figure, he is suppose to pay them % of profit, meaning whatever might be his earning in profit a percentage of that ... right or wrong?

And when they say "pay 60% of profit" it already means when there is a loss they will get paid less ... or no profit means no payment

I may be wrong as i have not studied business, so thought should ask

When you mean loss, are you referring to the melted ice cream?

Because that's what I didn't get. What was his loss with regards to the ice cream? It was simply that the ice creams melted, right? Otherwise, it wouldn't have been a loss, correct?

Ok, if I remember the meeting scene, the percentage owed was based on net profits...which means earnings after all costs are deducted, including unanticipated losses. Soaps, I would agree with your analysis that a smaller profit would or should mean a smaller payment (proportionally) to the franchiser. However, in the show's case, this is not obviously spelled out. In reality, if a business does not post a profit (typically for 2 or more quarters), a franchiser/developer may then impose fees or payments to cover the loss of payments that could compel the business owner to start liquidating assets to cover these costs. These penalties would be clearly spelled out in the contract. Also, any payments are typically to be paid quarterly (i.e once every 3 mths.)

A case or more of melted ice cream should not affect Mohan's bottom line. It is a small loss in the context of everything else he sells in the stores. Clearly, from what we know in the story, his start up costs as well as his miscellaneous expenditure are greater than his turnover & profit so far...Based on our timeline (& the fact that Sonal hasn't delivered yet), it hasn't even been a quarter (or 3 mths) since the store has been operational...In reality, you would be hard pressed to find a business that starts posting profits in such a small period of time...

Lik, his loss with the ice cream is that he would have to replace it, i.e. an added, unforeseen expenditure & a double whammy on his bottom line for that month both from the melted ice cream as well as the cost associated with replacing it.

wow nads...u impressed mohan😍i'm sure he'll take ur theory into consideration😍and he'll be happy to know u keep thinking abt him while going to sleep too😆

Originally posted by: likarsh

Because that's what I didn't get. What was his loss with regards to the ice cream? It was simply that the ice creams melted, right? Otherwise, it wouldn't have been a loss, correct?

It is stupid of him to think the vendors would share the cost for his store's mistake. His store was responsible for the loss, they're not going to take the loss.

Thats what he did not ask vendor to share it ... but the franchise owner with whom he has contract to give 60% share of his store's profit ... my point is isn't the profit calculated after recovering your total cost? And in case of melted ice cream it would just add to the total cost and hence profits will decrease ... when profit will decrease its obvious the franchise owner will get 60% of whatever the profit is ... so its was dumb of CVs to prove baapji right in terms of contract ... because if he has a contract in which he shares 60% of his profit with them, it automatically means they will get 60% of whatever profit he makes, if he does not make profit he won't share anything ... as simple as that ... so so dumb!

Nadalaa agreed but like i said in context of show what we know is he gives 60% of profit ... nothing else, so it means that is all the contract implies atleast in context of the show, since as viewers we are told nothing else ... also agree with timeline thing 😆