A test of your critical thinking. If you get it right, this $500 is yours tax-free. Probably more than you make in a week. Elena looked at the money, then at Julian.
"And if I get it wrong?" "If you get it wrong," Julian leaned in, his eyes gleaming with malice. You have to stand on that chair and announce to the entire restaurant that Julian Thorne is the smartest man in Chicago. The table erupted in nervous laughter. Brett and Cole looked uncomfortable, but didn't dare interrupt the boss.
I'm here to serve food, Mr. Thorne. Not to be your entertainment, Elena said, her voice steeling. Oh, come on. Are you scared?
It's just a question. Unless you know you're too stupid to answer it. He took a sip of wine. That's it, isn't it?
You know your place. The restaurant seemed to quiet down. People at nearby tables were glancing over. The tension was palpable.
Julian was bullying a server and no one was stopping him because he was Julian Thorne. Elena took a breath. She looked at the bills on the table. Then she looked at Julian's smug face.
She recognized that look. She had seen it in boardrooms in Tokyo, London, and New York. The look of a man who had never lost. "Ask your question," Elena said.
Julian clapped his hands together, delighted. Brave, I like it. Foolish, but brave. He sat back, swirling his wine glass.
He wanted something impossible, something she couldn't possibly know. He wouldn't ask about pop culture or sports. He would ask about his world, the world of high finance and elite strategy. He wanted to expose her ignorance so thoroughly that she would feel small forever.
Let's talk about value, Julian began, his voice taking on a professorial condescending tone. I just acquired a logistics firm. We are looking at the Veblen effect regarding their branding. He paused, waiting for her to look confused.
She didn't. Here is the question, Julian said, holding up a finger. I am considering a leveraged buyout of a competitor, Kensington Steel. The company has high assets but low cash flow.
If I buy Kensington using 80% debt financing at a 7% interest rate, but the company's return on assets ROA is only 5% classic economics says I lose money. I go into negative leverage. I bleed cash. He leaned forward, his eyes locking onto hers.
Yet I am going to do the deal next Monday. And I guarantee you I will make $100 million in the first year without firing a single employee or selling a single asset. How is that mathematically possible? What is the one hidden variable I am exploiting that a waitress could never understand?