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To do a proper net-present value calculation, you need more than just revenue & profit. You also want to know growth rate, gross margin, and capital efficiency
by beambot 4y ago
To do a proper net-present value calculation, you need more than just revenue & profit. You also want to know growth rate, gross margin, and capital efficiency.
- scarface74 4y agoIf a company doesn’t survive and is not profitable, there is no net present value calculation.
- TheCoelacanth 4y agoSurvival has more to do with cash flow than with profit.
- scarface74 4y agoI realize that I should have been more precise. I was talking about profit in the colloquial sense where profit = revenues - cost and not the GAAP meaning. For instance, even when Amazon was “losing money” for years, they were using cash flow to expand. If they were running short of money, they could have just stopped building infrastructure. They had marginal profit unlike companies that are losing money on each sell.