What do you think the speaker in the Concepts in Action video you watched this week meant when he mentioned that he talked about the time value of money with his managers?

Discussion Post: Time Value of Money

            When the manager said that he talked to the sales managers and other managers on the time value of money, the argument he fronted was that as the cars spent time at the yard, their value was depreciating, not appreciating. The concept of the time value of money, as applied in the video, is that the business can make profits if it sells its second-hand vehicles faster and does not place them where consumers might fail to see their presence. As time goes by, the value of the cars will depreciate, meaning that the business will make losses. Consequently, moving the vehicles in front can increase sales and save the company from losses because of the car's depreciating value. The time value of money means that money's earning potential in the interim makes its value higher in the present than the same amount would be in the future (Parrino et al., 2018).

 During my stint working in a sales office for an apparel company, the stock had a timeframe for sales beyond which the business would record losses. The apparel industry operates in an environment where fashion trends dictate sales and demand. The value of a clothing product or show depends on its perception in the market. A business receives higher returns when sales are made during the high trending period of the product. As consumers' interest in the product declines, the value significantly drops. Also, the revenue received from quicker sales of the product can be reinvested to generate additional money than leaving the product idle in the stores to sell it at a similar price in the future, when the current sales would have yielded an additional sum from investments' activity.