Return on Investment: Understanding Your Profit Margin - Deepstash
What Is Opportunity Cost

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The impact of opportunity cost on personal and professional life

Evaluating the benefits and drawbacks of different choices

Understanding the concept of opportunity cost

What Is Opportunity Cost

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Return on Investment: Understanding Your Profit Margin

Return on Investment: Understanding Your Profit Margin

Return on investment (ROI) is a measure of how much money you've earned on your initial investment. It can help you understand your profit margin and make informed decisions about future investments. In our lemonade stand example, Ackman calculates that the business will have an ROI of 17% ($170 in net income / $1,000 initial investment).


285 reads


Scaling Your Business: Using Your Profits to Grow

Scaling Your Business: Using Your Profits to Grow

Scaling your business is a challenging but rewarding process. By reinvesting your profits back into your business, you can fuel growth and take your business to the next level. Just remember to have a solid plan in place, manage your cash flow effectively, and stay true to your core values and mi...


281 reads

Profit and Loss: Calculating Net Income

Profit and Loss: Calculating Net Income

The bottom line on the income statement is net income, which is the amount of profit or loss a business has made over a specific period of time. In our lemonade stand example, Ackman calculates that the business will have a net income of $170 ($800 in revenue - $530 in expenses).


272 reads

Starting a Business: Incorporation

Starting a Business: Incorporation

To start a business, you'll need to choose a legal structure. One common option is incorporation. This means that you create a separate legal entity for your business. As Bill Ackman explains in our lemonade stand example, you'll need to file paperwork with your state and come up with a name for ...


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Understanding the Income Statement

Understanding the Income Statement

An income statement is a financial statement that shows a company's revenue, expenses, and net income over a specific period of time. It can help you understand how much money your business is making and where that money is going. In our lemonade stand example, Ackman explains that the income sta...


266 reads

Fixed Assets and Inventory

Fixed Assets and Inventory

Fixed assets are long-term assets that a business uses to generate revenue, such as buildings or equipment. Inventory refers to the products a business has on hand to sell to customers. In our lemonade stand example, Ackman explains that the business will need to buy a lemonade stand for $300 (a ...


289 reads

Understanding the Balance Sheet

Understanding the Balance Sheet

A balance sheet is a financial statement that shows a company's assets, liabilities, and equity at a specific point in time. It's important to understand the balance sheet to see how your business is doing financially. In our lemonade stand example, Ackman explains that the balance sheet shows th...


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Raising Capital: Selling Stock and Borrowing Money

Raising Capital: Selling Stock and Borrowing Money

Once you've incorporated your business, you'll need to raise capital to get started. This can be done by selling stock or borrowing money. As Ackman explains, selling stock means that you're selling ownership in your company. In our lemonade stand example, Ackman sold 500 shares of stock for $1 e...


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Public Speaking, Coaching, Counseling, Mindfulness & Autogenic Training, Neuro-Linguistic Programming, Computer Engineering, Osteopathy, Traditional Chinese & Ayurvedic Medicine, Asian Languages and culture, Music & Art Therapy, Nada Yoga, Spiritualism

If you're new to finance and investing, you might feel overwhelmed by all the jargon and technical terms. However, understanding the basics can help you make informed decisions about your money. In this article, we'll explore the fundamentals of finance and investing using a simple example: a lemonade stand by William Ackman.

Related Collection


What is return on investment (ROI)?

Return on investment (ROI) is a way to measure an investment's performance. It also can be used to compare different investments.

  • ROI calculation applies to not just trading or investment, but any kind of business or purchase. 
  • Calculating an estimated ROI base...

Forming the habits of an investor

Investors put their money to work. They know that the money they set aside today sets them up for financial freedom.

  • An investor puts any excess money towards investments that will earn more capital.
  • They value learning new skills and think of ways to use it...

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