14
votes
Accepted
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 ...
- 412
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 ...
- 57.7k
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 ...
- 29.6k
7
votes
Accepted
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 -...
- 3,555
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 ...
- 15.8k
5
votes
Accepted
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 ...
- 6,990
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 ...
- 8,574
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, ...
- 779
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 ...
- 941
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 "...
- 33.9k
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 ...
- 1,819
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 ...
- 593
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, ...
- 431
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 ...
- 33.9k
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 ...
- 4,765
2
votes
Accepted
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 ...
- 9,907
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, ...
- 249
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 ...
- 941
2
votes
Accepted
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 ...
- 1,819
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 ...
- 4,121
2
votes
Accepted
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 ...
- 651
1
vote
What happened when the money from share issuance is spent?
Equity equals assets minus liabilities. If a bank “spent everything,” assets would be zero, and so equity would have to have been written down to zero. Expenses - including capital depreciation - ...
- 9,907
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 ...
- 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 ...
- 121
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 ...
- 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 ...
- 2,006
1
vote
Accepted
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 ...
- 57.7k
1
vote
Accepted
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 ...
1
vote
Why intuitively does Break-even point $= \dfrac{\text{Total fixed costs}}{\text{Selling price per unit} − \text{Variable cost per unit}}$?
Intuitively, the breakeven point is where the volume of sales results in the gross margin (based on the difference between selling price and variable costs per item) exactly covering fixed costs
- 4,765
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