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14 votes
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Why don't profitable firms use previous profits to offset current loss

The primary goal of most companies is to make money for its shareholders. They put money in, and they expect to either get dividends, or be able to resell their shares for a higher amount. It's the ...
jcaron's user avatar
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12 votes

Why don't profitable firms use previous profits to offset current loss

Specific case of EasyJet It is impossible to answer whether EasyJet in particular could do something different, without some detailed case study. Just stating that the firm was profitable in past is ...
1muflon1's user avatar
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10 votes

Why don't profitable firms use previous profits to offset current loss

It might make sense to cut the jobs as it looks like they will be operating at reduced capacity. The article does not say that they could not keep on the workers and "smooth" their yearly ...
Giskard's user avatar
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7 votes
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What is the difference between gross, operating, net profit and EBIT(DA)?

So, here goes: Gross Profit = Revenue - COGS (Cost of Goods Sold) If you bought an orange for a dollar and sold it for two, you have one dollar of Gross Profit Operating Profit = Gross Profit - Labor -...
Jason Nichols's user avatar
6 votes

What is the maximum number of characters in a currency symbol?

Instead of currency symbols, some of which are used by more than one currency as @HotLicks suggests, you may want to consider the three-letter currency codes used in most currency exchanges. Here is a ...
Herr K.'s user avatar
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5 votes
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How could Pablo Escobar earn so much money?

Not sure an economist can answer this particular question about Escobar's wealth and not only because all the given estimates are uncertain. A more interesting question for an economist (or at least ...
emeryville's user avatar
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4 votes

Why don't profitable firms use previous profits to offset current loss

Overall profits are irrelevant to layoffs. What matters are marginal profits from employees. If the marginal profit from retaining employees is negative, then employees should be laid off. Similarly, ...
Acccumulation's user avatar
4 votes

Can a firm have a negative turnover during a period of time?

One possible circumstance relates to firms undertaking long term contracts (eg for building or engineering work). Where a contract is uncompleted at the end of a period, the firm may (depending on its ...
Adam Bailey's user avatar
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3 votes

Why don't profitable firms use previous profits to offset current loss

I think an important point of view for this question is also from financial side: The profit made in previous years may not necessarily accessible for the company in form of cash or other assets. In ...
Dayne's user avatar
  • 1,725
3 votes

Equity value vs Stockholders Equity

"Stockholder's equity" is how we label Equity in corporations, so it should be identical to the general concept of "Equity", except if, by a confusing misuse of words, by "...
Alecos Papadopoulos's user avatar
3 votes

Is amazon retail not very profitable?

I don't know if Amazon breaks out downloads such as Kindle or movies from the non-AWS part of income statement. You might look at the annual filing to see if there is a breakdown. You are interested ...
H2ONaCl's user avatar
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2 votes

What is the difference between gross, operating, net profit and EBIT(DA)?

Gross profit = revenue - cost of goods sold (COGS) Operating Profit (also known as EBIT or operating income) = Operating Revenue - COGS - Operating Expenses - Depreciation & Amortization Net ...
Alexis L.'s user avatar
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2 votes

Definition of market to book value?

They are not the same. Basic accounting equation: Assets = Liability + Shareholder Equity Assets refers to what the company actually owns: cash, property, ...
Kontorus's user avatar
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2 votes
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In a bi-weekly payroll cycle, there are only ever 26 pay dates, correct?

You mean 26 pay dates per year, right? Then no, because a year is 365 days long and a 26 biweeks are $26 \cdot 14 = 364$ days long. Therefore any year that starts with a Friday (which is usually a ...
Giskard's user avatar
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2 votes
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What happens on a banks balance sheet when the borrower submits loan payments?

If you make a payment of \$X, then: loan balance (bank asset) goes down by \$X, and deposit balance (bank liability) goes down by \$X. I.e., the bank balance sheet shrinks (as do money aggregates ...
Brian Romanchuk's user avatar
2 votes

Why don't profitable firms use previous profits to offset current loss

Why can't they offset the loss (caused by special case) from their earlier profits rather than resort to drastic job cuts and government bailout? There are several reasons: History is already past, ...
ghellquist's user avatar
2 votes

Can a firm have a negative turnover during a period of time?

By issuing credit notes in the period higher in value than the invoices of the period. Typically, such credit notes correct mistakes or award overall discounts related to past periods, so they mess ...
Alecos Papadopoulos's user avatar
2 votes

Negative expenditures in public budgets

There are several issues here, but the three most significant are: The National Accounts treatment of the public sector, which is set out in international standards and controlled by the Office for ...
Henry's user avatar
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2 votes

What happened when the money from share issuance is spent?

You are concerned about... someting that can save the bank from bankruprtcy it problems occurs, when there is no money This is an accounting question as much as an economics question. What you are ...
H2ONaCl's user avatar
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2 votes
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When is a dollar of bank credit considered to be foreign owned in the calculation of the capital account of the US?

Your question's title and body are not exactly same as there is no credit in the body of the question. For the question in the body, the rent payment to the Brit will be covered in the current account ...
Dayne's user avatar
  • 1,725
2 votes

Why doesn't imports from receiving country match exports from sending country?

In UN COMTRADE, imports are recorded cif (cost insurance and freight) while exports are fob (free on board). This may represent a 10% to 20% difference. Despite all efforts made by national and ...
AKdemy's user avatar
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2 votes
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Confusion in the relationship between GNDI and GNI

No, taxes are either: used for transfers between individuals. One person has less to spend on consumption or investment but other person has more. government income also counts as a disposable income ...
Leeh Mizrahi's user avatar
1 vote

Why don't profitable firms use previous profits to offset current loss

Generally speaking, companies don't hold onto a bunch of cash. Doing so is risky and inefficient. If you (as a company's board) hold onto too much cash instead of paying it back as dividends, your ...
bta's user avatar
  • 299
1 vote

Why don't profitable firms use previous profits to offset current loss

Why can't they offset the loss (caused by special case) from their earlier profits rather than resort to drastic job cuts and government bailout? That doesn't really mean anything. They had those ...
David Schwartz's user avatar
1 vote

Why would minimum rent under franchise arrangements for McDonald's decrease year by year?

Suppose McDonald's has 2 franchisees. Franchisee A under its current franchise arrangement has to pay \$100 a year of minimum rent until the current arrangement ...
cpage's user avatar
  • 520
1 vote

Why some companies are reporting loss due to the new US tax law?

@ThisIsNoZaku is correct, but I thought I should explain the mechanism. When you have a tax asset, you were required to pay a tax by the taxing authority before GAAP says the income happened. A tax ...
Dave Harris's user avatar
  • 2,006
1 vote

Interest Rate vs. Borrowing Rate - Difference

The Interest Rate is a more general term, and can cover all shorts of financial transactions where one expects by a contractual clause to get their money back plus "a little something" (I am not ...
Alecos Papadopoulos's user avatar
1 vote
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What's the difference between loans, notes, bonds and mortgages?

Loan is an umbrella term for individual(s)/organization(s)/government(s) borrowing from another individual(s)/organization(s)/government(s). Mortgage is a type of loan for the purpose of obtaining ...
1muflon1's user avatar
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1 vote
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What is a super deduction?

Deloitte managed a semi-intelligible explanation. It's called "super" when an income tax deduction is applied twice for the same item (e.g. for R&D)... In early 2015, Slovakia introduced a new ...
the gods from engineering's user avatar

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