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Recently I was reading a book on corporate finance titled "corporate finance for dummies". Here in the introduction page the author has given a definition for corporate finance, followed by a statement as follows.

"Corporate finance is the study of how groups of people work together as a single organization to provide something of value to society. If a corporation is using up more value than it’s producing, it will lose money and fail"

I'm quite well confused in conceptualizing the meaning of the line that "a corporation looses money if it produces more than its value". So does the line mean that if a corporation try to produce a product that costs more than its original value, then the corporation may run into a loss. Can someone elaborate the idea, as it helps a lot.

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  • $\begingroup$ (-1) Use quotes to quote, not rephrase, because sometimes the rephrasing can change the meaning of the entire sentence. $\endgroup$
    – Giskard
    Commented Feb 4, 2022 at 9:06
  • $\begingroup$ done, sorry for that. $\endgroup$
    – Charles
    Commented Feb 6, 2022 at 9:19
  • $\begingroup$ You misunderstand. You appear to quote the sentence "a corporation looses money if it produces more than its value" but does this appear anywhere in your source, or is this your own phrasing? $\endgroup$
    – Giskard
    Commented Feb 6, 2022 at 9:21
  • $\begingroup$ yep, re-edited the title now. $\endgroup$
    – Charles
    Commented Feb 6, 2022 at 9:37
  • $\begingroup$ I will try to explain it more simply: where did you read this sentence? "a corporation looses money if it produces more than its value" Please link to the source, or give the page number of the book where this exact sentence appears. $\endgroup$
    – Giskard
    Commented Feb 6, 2022 at 9:45

1 Answer 1

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Read the statement closely. The second sentence doesn't say that a corporation loses money if it produces more than its value, it says that a corporation loses money if it uses up more value than it produces.

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  • $\begingroup$ yh but can you elaborate/ interpret the meaning in simple terms $\endgroup$
    – Charles
    Commented Feb 4, 2022 at 14:21
  • $\begingroup$ @Charles, If you buy apples for €100 and pay a worker €50 to make apple juice from them, but you can sell the juice for at most €120, then you are losing money. $\endgroup$
    – VARulle
    Commented Feb 4, 2022 at 15:14
  • $\begingroup$ so the meaning of value here is money or expense on production. is it? $\endgroup$
    – Charles
    Commented Feb 6, 2022 at 9:17
  • $\begingroup$ Does the line state that if a corporation try to produce a product that costs more than its original value, then the corporation may run into a loss. $\endgroup$
    – Charles
    Commented Feb 6, 2022 at 9:40

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