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Why would you use revenue and not net profit for this calculation?
by 10000truths 2y ago
Why would you use revenue and not net profit for this calculation?
- interroboink 2y agoAlso the dimensional analysis is wrong. X dollars/day ÷ Y dollars = 1/days (so, the answer is inverted)
- whamlastxmas 2y agoBecause profit is a poor indicator of financial flexibility. Amazon being the famous example of running at maximum growth for many years instead of trying to have fat profits. That said, revenue isn’t a great indicator either.
- JumpCrisscross 2y agoOr if you want to use revenue, revenue from the data sales.
- sebzim4500 2y agoWhat would be the justification for using profit rather than revenue? For years Amazon was one of the biggest companies in the world while never making a profit. If it engaged in wrongdoing should they have been given a fine of 0$ (or negative I guess) since they weren't profitable?
- jddj 2y agoI don't think the parent is suggesting that they be fined based on their profit. They're saying it's unusual to use revenue to talk about how easily a company could pay a fine, given that (cashflow cleverness aside) your revenue doesn't determine your ability to pay for arbitary extras. In reality neither does net profit, as nonessentials and comp tend to consume just enough to leave a profitability which keeps shareholders happy.
- Alupis 2y agoBecause then you wouldn't be nearly as outraged by the "data" of course!