Thursday, December 07, 2006

Nasdaq chief lacks skills in economics.

Bob Greifeld, the chief executive of the Nasdaq stock market, admitted under oath that he did not understand how to calculate gross profit margin, one of the most rudimentary formulas in business accounting.

Mr Greifeld’s lack of basic accounting knowledge was exposed this year during a case in the New Jersey Superior Court. The Nasdaq chief filed a lawsuit against a company called Tours of Enchantment, which had organised a $600,000-plus reunion for his family at a luxurious castle in Ireland.

Mr Greifeld, meanwhile, claimed in his lawsuit that he understood the contract to be based on cost plus a mark-up of 38 per cent. If an item that costs $100 is marked up by 38 per cent, it becomes $138 on an invoice. If the same item is required to show a 38 per cent profit margin, it becomes $162, because gross profit margin is calculated by dividing profit by the selling price of an item.

Gratitude:KF Webs
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