3 ms·
Their expenses are higher than their revenue.
by micael_dias 7y ago
Their expenses are higher than their revenue.
- askafriend 7y agoIf I bought 10 McDonald's franchises today, my expenses would be higher than my revenue for probably the entire first year if not more. If things are going well, and I make another bet by buying 10 more, my expenses would continue being higher than my revenue (even if the first 10 stores become profitable). If I keep doing this, I may not show a profit on my balance sheet for a long time. This example illustrates why "expenses are higher than revenue" doesn't reveal anything and that such a simplistic picture of a business is useless.
- scarface74 7y agoWhat would it reveal if your marginal costs were greater than your marginal revenue? Has anyone done a cohort analysis?