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They should be written as a % of profit from the area generating the fine
by fauxpause_ 3y ago
They should be written as a % of profit from the area generating the fine
- detaro 3y agoGiven the creativity in accounting possible for multinationals and the difficulty in capturing value added to other areas from activities in an area that's a number with very little actual value.
- fauxpause_ 3y agoThe accounting is not what matters. What matters is using your brain to to figure out if a fine is actually meaningful. Comparing to revenue is a stupid way to think about things. Profit is the incentive to conduct business. Not revenue. And not global profit, but in this case Ireland/EU profits only, because that is the location fining them. People are so eager. Every. Single. Time. To say that a fine does not matter even if it clearly outpaces multiple years of profits for the area given.
- Spivak 3y ago> Comparing to revenue is a stupid way to think about things. Profit is the incentive to conduct business Because it is and it isn't. Companies can make people filthy rich while not making a single dollar of profit thanks to the stock market where the price does grow, broadly, in terms of revenue.
- fauxpause_ 3y agoYou’re right in that it ought to be compared to the scale of profits, not a percentage, as many run on a loss during growth. But profit is still what matters. Including the promise of future profits. Talking of the future doesn’t help much because both numbers will change. And punishing a company based on its future state is… not possible
- ilyt 3y agoThe max fine is 4% of a firm's annual revenue from the preceding year so this is around ~1% of revenue