The “Cow Trade” Profit Puzzle: A Simple Business Math Lesson…full details in comment 1st ..
The little meme showing a cow and four transactions has sparked plenty of curiosity: “I bought a cow for $800, sold it for $1000, bought it again for $1100, and sold it again for $1300. How much did I earn?” Let’s break down the math behind this classic profit‑calculation riddle and turn it into a short, readable article. ### The Step‑by‑Step Calculation 1. First trade: – Buy for $800. – Sell for $1000. – Profit = $1000 – $800 = $200. 2. Second trade: – Buy again for $1100. – Sell again for $1300. – Profit = $1300 – $1100 = $200. 3. Total earnings: – Add the two profits → $200 + $200 = $400. ### An Alternative Viewpoint Some people look at the overall cash flow: – Total money spent = $800 + $1100 = $1900. – Total money received = $1000 + $1300 = $2300. – Net profit = $2300 – $1900 = $400. Both methods confirm the same result: the total earnings from the two buy‑sell cycles are $400. ### Why This Puzzle Tricks the Mind The riddle feels confusing because the second purchase price ($1100) is higher than the first sale price ($1000), making it seem like the overall profit should be less. The key insight is to treat each transaction pair separately; the profit on each cycle is independent of the previous one. ### Real‑World Takeaway This simple example teaches a basic business principle: profit is the difference between selling price and cost price for each transaction. When you flip assets multiple times, calculate each cycle’s margin and sum them for the total gain.