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profit = 1.3 * revenue - 1.1 * cost and profit = 1.1 * revenue - 1.3 * cost are both possible. the first leads to record profits every year, the second doesn
by reverendsteveii 2y ago
profit = 1.3 * revenue - 1.1 * cost
and
profit = 1.1 * revenue - 1.3 * cost
are both possible. the first leads to record profits every year, the second doesn't. the exact % change in profits is relevant because it can be positive, negative or zero in an environment with uneven inflation. Reality, at the moment, is an environment with uneven inflation.
- antasvara 2y agoWhile the point here is generally true, investor owned utilities have revenues (i.e. electricity rates) that are tied to their expenses. That's the reason they have to ask for a rate increase; if the rate increase was designed to juice their profit margin to 30%, it would likely be denied (not guaranteed, but likely). So this is one industry where you'd expect revenue to increase in proportion to expenses.