Entertainment 7Twenty is bankrupt, but Tom doesn’t understand how his company has gotten this far. Tom took the phrase “spend money to make money” a bit too literally and spent all of the money that was invested in the company, including a limousine with a hot tub in it. Unfortunately for Tom, the revenue didn’t follow.
See more: costs, input costs, profit, revenue, variable costs
Ben has been asked to help Entertainment 7Twenty manage their finances because their costs are way higher than their revenues. His first suggestion is a downsizing of the building and keeping better financials. Unless the firm starts generating revenue, they only have enough cash for another month of operation.
See more:break even, capital, diseconomies of scale, economies of scale, fixed costs, profit, revenue, variable costs