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Using that math, I've already 'earned' many millions in my lifetime, even though I've only been out of college for a couple years. And that number gets even mo
by beoba 16y ago
Using that math, I've already 'earned' many millions in my lifetime, even though I've only been out of college for a couple years.
And that number gets even more exaggerated if I choose to base the calculation off a month where I got a bonus.
My point stands; it's fabricated revenue.
- pchristensen 16y agoIt's a well understood and useful concept. Let's say you work at a job making $120K. Then in November, you start a new job paying $180K. Would you think that you make $130K (the amount you actually earned that year) or $180K (the amount you expect to make going forward)? Is the extra $50K fabricated salary? How else would you communicate fast growth in revenue? Also, since run rate is well understood, people don't use it for exceptional or one-time events like a bonus. For example, Groupon didn't claim to be raising money at $12B/yr since the big raise was a one-time event.
- beoba 16y agoIt doesn't communicate growth -- there is nothing to compare against. If you were going to do that, you'd simply provide a something like YOY% change in revenue. A run rate is just inflating/fabricating PAST revenue by speculating on the FUTURE. Refer to my helpful chart: | / <- SHOW THIS NUMBER TO INVESTORS, PRETEND IT WILL GO ON FOREVER | / |/ <- HIDE THIS NUMBER, TOO LOW +---
- tptacek 16y agoWow, a handy ASCII chart that disproves the entire concept of investment. Congrats!