I don’t wish to knock profit. It’s important. But I also suspect that most users of accounts really do not know what it is.
Some might think it’s something tangible that they might see, or even physically count. But of course, it is not. It’s a residual. That’s because it is the difference between income and expenditure.
We can’t count residuals, eh? Makes a true buggery of attempts to tax what can’t be counted then.
A Murphyism, that business owners are not aware of their profit/loss situation.
He raises the bar of stupid every day.
Murphy’s second law?
Any thoughts originating with or stolen by Murphy are wrong.
I don’t wish to knock profit. It’s important. But I also suspect that most users of accounts really do not know what it is.
How to be an arrogant fuck in three simple sentences.
This from the man who really doesn’t know what tax avoidance is.
Tim, the accounting profit that Murphy thinks is the only reality cannot actually be counted because it not just the cash in the till but includes the change in the book value (as determined by accountants almost but not quite completely unlike Murphy) of the physical and intangible assets of the business.
That doesn’t stop the government from trying to tax businesses – the government just sets up its own rules to calculate its own version of “profit” which differs from Murphy’s. Hence all the “deferred tax” items in company accounts where the HMRC definition of “taxable profits” differs from the ICAEW definition of “profits”.
However, what the typical small business regards as profit – the money left in the till after paying wages and replacing stock *is* real and *can* be physically counted. Also, being better at maths than Murphy, I *can* (and do) count my profit on an HMRC accounting basis (I *could* on an ICAEW basis but there’s no point).
John 7:7
Shurely that’s why depreciation was invented? It’s wot got Tesco into trouble innit? That they had to replace their shelves every 7 years not every 8 years, something like that.
What’re the odds that the tuber could explain what EBIDTA is without looking it up?
“This from the man who really doesn’t know what tax avoidance is.”
Oh yes he does. It means whatever he says it means, nothing more, nothing less.
What’re the odds that the tuber could explain what EBIDTA is without looking it up?
EBIDTA to RM? Earnings Before I Decide The Amount.
So, then . . . we can count it?
Wasn’t it Alan Sugar who said that many a profitable company has gone bust? Or was he quoting someone else?
Lots of profitable companies go bust. A cash flow crisis often.
@ BiG
Yeah – BUT that was depreciation in reality not according to some formula dreamed up by the ICAEW or their overseas equivalent. The formula only occasionally matches (even approximately) reality.
One of the most successful companies in Slovakia in the 1990s was Slovenska Armaturka Myjava because it was able to reinvest much of its cash flow since the sum it was required to remit to the communist state was reduced by its straight-line depreciation charge on all the equipment it still used including some that manufactured replacement parts on imperial standard units predating the German invasion so more than 50 years old. The Communist bureaucracy didn’t disallow depreciation on stuff already written down to zero lest others wanted to write off equipment less than 20 years old.
EBIDTA
Isn’t that what they give people with lead poisoning?
Weekend Humour
Lisa Nandy: A would-be Labour leader and the shambolic Friends of Palestine
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Rebecca Long Bailey: I’ve been prolier than thou for 12,000 years, says Labour hopeful
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Jess Philips: When ‘telling it like it is’ means saying nothing at all
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Dear Mr Cummings
@gamecock “He raises the bar of stupid every day.”. Being pedantic it’s more like he lowers the bar but increases the volume.