3 ms·
Money spent on building new services and infrastructure is not profit, it's expense. By either GAAP or dictionary definitions.
by KKKKkkkk1 8y ago
Money spent on building new services and infrastructure is not profit, it's expense. By either GAAP or dictionary definitions.
- kgwgk 8y agoI’m not sure if that’s what you’re tring to say, but in the case of Amazon the money being spent in building infrastructure is the profit. The (after tax) profit from yesterday is spent on capital assets today to increase profit in the future (and depreciation of these assets will be deducted from future profits).
- kgwgk 8y agoOr more precisely, the profit is part of the money being spent on capital assets. Because they spend much more: the $10bn non-cash charge from depreciation (but that’s “maintenance” capex), the $4bn they “save” by paying employees with stock (essentially a capital raise), they also raise debt ($17bn last year, mostly to acquire Whole Foods) and many assets are not purchased but leased.