Own funds (capital) in the business plus any trade payable and other available credit
Bank Funding
Bank Interest Rate
Gross Margin Percentage
Annual Overhead
Trade Cycle in days *
Estimated Net Profit

* - how many days from paying your supplier until you get paid for the sale.

It’s really very simple. With existing funding, total resources are
With a trade cycle of days
Funds can be turned times per year
At a gross of
Sales of could be generated
Gross Profit would be
Less Expenses of
And less interest of
Net profit will be

Now, assume a lender either replaces the bank with a bigger line or provides a supplemental line to the bank

Banks Fund and supplemental
funds of
Supplemental lenders rate  
Estimated New Net Profit  

Under the new funding arrangement, additional availibility is
On the same trade cycle the additional funds can be turned times per year
Which could result in additional sales of
Which translates into gross profit of
Assumimg the same expense base the only additional cost is extra interest of
Yielding additional net profit of
For a new total net profit of
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2006 Gerber Finance Inc.