[LanceH]

The numbers are crazy.

What they were selling was $40 gift certificates for $20. Then they sold a $30 good for a $40 gift certificate.

They recorded this as a $40 sale with a $30 cost and $20 marketing. The implication that you can eventually cut back on the marketing, which is obviously false.

IMO, the $40 should never appear in anything that could be construed as revenues. Sure, you can work it such that you'll end up with the proper ($10) loss, but they never received an actual $40, their only (well, majority) revenue appeared in the form of $20 payments from the group selling the gift certificates.