3 ms·
Is Gross Margin closest to GDP? In GDP when I sell Paul a loaf of bread for £5 I'll probably make £4 gross margin but my revenue is £5. GDP measures the total c
by Traster 8y ago
Is Gross Margin closest to GDP? In GDP when I sell Paul a loaf of bread for £5 I'll probably make £4 gross margin but my revenue is £5. GDP measures the total cost of the output, not the output minus the costs (in fact for the GDP of the whole system it's output PLUS costs since the costs count as outputs of other people in the economy)
I think a better comparison would be revenue surely?
- buybackoff 8y agoCompany costs are revenues to someone else (even payroll is then spent on goods & services). Revenue will double count. Also I just did a very quick number lookup without pretending for scientific correctness, just became curious after reading the parent comment. GDP is C + I + G + NX. In MSFT 10-K R&D are after the gross profit, so I is there. C attributable to MSFT is sales less costs to avoid double counting. G are taxes which are also there. We should also add D&A and Capex normally as a part of I, but for software companies it's mainly R&D that is allowed to be recognized as cost (which gives huge tax benefits and should stimulate R&D activity, in theory).