5 ms·

"It has said it intends to be profitable, without tax-related expenses, by the end of next year." That's a bizarre interpretation of "profitable".

digikata 10y ago
I think that it's the articles colloquial expansion of EBIT. EBIT (Earnings Before Interest & Taxes) is a somewhat common financial metric. I think it is useful to look at if you have a concern that a business has tax/interest portions of their balance sheet that might be skewing the other measures of profitability.
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qwrusz 10y ago
I agree, very bizarre way to claim profitable. As for the other comments mentioning EBITDA. The Tax in EBITDA is income tax. You cannot be taxed out of being profitable. The tax rate is not >100% so if you are profitable before taxes you are profitable after taxes. Just less so. I have no idea what postmates means here by "profitable, w/o tax-related expenses". Maybe something like sales tax they collected that must be remitted? (that's not technically an expense either but they don't seem to know what they are doing or saying at the moment).
- JumpCrisscross 10y ago
  > The tax rate is not >100% Lol welcome to New York. Even ignoring the cost of preparing reams and reams of paperwork, a flat $4 tax on, say, bagels could very well flip margins negative.
  - jdavis703 10y ago
    There can't really be a $4 bagel tax. And if there were wouldn't shops just pass the cost on to consumers (similar to the "Obamacare surcharge" many restaurants seem to be tacking onto bills currently)?
    - dopamean 10y ago
      There isn't a $4 tax on bagels in New York, and yes, if there were it would just be transferred to consumers. Much like the local cigarette tax.
  - gnopgnip 10y ago
    NY has an $0.08 tax on bagels. But only prepared bagels.
  - qwrusz 10y ago
    I live in NY. I think if a business is inside the profitability margin of error where a bagel tax or bureaucracy cost could very well flip it upside down then it's not profitable even if it is. These are the types of companies that will blame "bad weather" as the reason for a quarterly loss. If conditions need to be perfect and regulations friendly and nothing bad can happen/everything must go according to plan for a company to be profitable, it's not profitable.
- lathiat 10y ago
  It's not clear to me which side of EBITDA we're arguing on, but as a generalized statement capital expenses for which you cannot claim a full immediate deduction could put you in debt -- the full tax claim is deferred over the life of the asset. You could earn $10,000 of revenue -- spend $10,000 on a server and then still owe some 20-30% income tax because you cannot claim the full $10,000 deduction in that first year. For my server example that may be 3-4 years, some plant and equipment can be much longer. This is also based on Australian tax, I assume it's similar elsewhere but don't know the intricacies.
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- gaius 10y ago
  EBITDA really only makes sense for businesses with large capital assets, like dams or runways.
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digikata 10y ago

I think that it's the articles colloquial expansion of EBIT. EBIT (Earnings Before Interest & Taxes) is a somewhat common financial metric. I think it is useful to look at if you have a concern that a business has tax/interest portions of their balance sheet that might be skewing the other measures of profitability.

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qwrusz 10y ago

I agree, very bizarre way to claim profitable. As for the other comments mentioning EBITDA. The Tax in EBITDA is income tax. You cannot be taxed out of being profitable. The tax rate is not >100% so if you are profitable before taxes you are profitable after taxes. Just less so. I have no idea what postmates means here by "profitable, w/o tax-related expenses". Maybe something like sales tax they collected that must be remitted? (that's not technically an expense either but they don't seem to know what they are doing or saying at the moment).

JumpCrisscross 10y ago
> The tax rate is not >100% Lol welcome to New York. Even ignoring the cost of preparing reams and reams of paperwork, a flat $4 tax on, say, bagels could very well flip margins negative.
- jdavis703 10y ago
  There can't really be a $4 bagel tax. And if there were wouldn't shops just pass the cost on to consumers (similar to the "Obamacare surcharge" many restaurants seem to be tacking onto bills currently)?
  - dopamean 10y ago
    There isn't a $4 tax on bagels in New York, and yes, if there were it would just be transferred to consumers. Much like the local cigarette tax.
- gnopgnip 10y ago
  NY has an $0.08 tax on bagels. But only prepared bagels.
- qwrusz 10y ago
  I live in NY. I think if a business is inside the profitability margin of error where a bagel tax or bureaucracy cost could very well flip it upside down then it's not profitable even if it is. These are the types of companies that will blame "bad weather" as the reason for a quarterly loss. If conditions need to be perfect and regulations friendly and nothing bad can happen/everything must go according to plan for a company to be profitable, it's not profitable.
lathiat 10y ago
It's not clear to me which side of EBITDA we're arguing on, but as a generalized statement capital expenses for which you cannot claim a full immediate deduction could put you in debt -- the full tax claim is deferred over the life of the asset. You could earn $10,000 of revenue -- spend $10,000 on a server and then still owe some 20-30% income tax because you cannot claim the full $10,000 deduction in that first year. For my server example that may be 3-4 years, some plant and equipment can be much longer. This is also based on Australian tax, I assume it's similar elsewhere but don't know the intricacies.
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gaius 10y ago
EBITDA really only makes sense for businesses with large capital assets, like dams or runways.
- deleted 10y ago
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