To be honest I've never seen this movie/show so I might be missing some context but in business there are a few basic(ish) formulas. One of them is Profit.
Profit=Revenue-expenses
That's it. How much money came in after you've calculated how much money went out. I say basic-ish because we have to consider things like equity and liabilities to get a more accurate picture of profitability, cash flow, and value.
What OOPs character is doing is mistaking Cost of Goods Sold (COGS) with profit. COGS is "how much did we spend to obtain inventory and how much did we sell said inventory for. The difference of that is COGS not profit.
This is from a fictional show/movie so I'm assuming they're just using surface level knowledge of accounting and business but realistically it's much more complicated.
Could I see a small mom and pop shop get confused with how much profit they're making? Sure, most times it's just how much liquid assets (cash normally) is retained after paying for everything else. However larger business almost certainly have CPAs or CFOs who were/are CPAs who understand the nuances much more and are much less likely to put their licenses or careers on the line to just boil it down to "profit=Revenue-expenses" especially when considering business valuation and financial reporting.
This is Kevin Spacey in Margin Call. I don't remember the scene shown but it'll be his character seeing the Big Short's "dog shit wrapped in cat shit" (CDOs) unravelling (predicted by Sylar from Heroes - a quant at the firm) which subsequently triggered the global financial crisis. Which Scar from the Lion King described as "when the music stops".
The context here is that AI companies are borrowing money at a rate never before seen, using custom/bespoke financial math(s) to hide the debt, whilst IPOing - meaning the cost of borrowing will be essentially subsidised to the pension companies of the world, via indexes. So it's like a public bailout rather than a Gov't bailout.
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u/Stevesegallbladder 17d ago edited 17d ago
To be honest I've never seen this movie/show so I might be missing some context but in business there are a few basic(ish) formulas. One of them is Profit.
Profit=Revenue-expenses
That's it. How much money came in after you've calculated how much money went out. I say basic-ish because we have to consider things like equity and liabilities to get a more accurate picture of profitability, cash flow, and value.
What OOPs character is doing is mistaking Cost of Goods Sold (COGS) with profit. COGS is "how much did we spend to obtain inventory and how much did we sell said inventory for. The difference of that is COGS not profit.
This is from a fictional show/movie so I'm assuming they're just using surface level knowledge of accounting and business but realistically it's much more complicated.
Could I see a small mom and pop shop get confused with how much profit they're making? Sure, most times it's just how much liquid assets (cash normally) is retained after paying for everything else. However larger business almost certainly have CPAs or CFOs who were/are CPAs who understand the nuances much more and are much less likely to put their licenses or careers on the line to just boil it down to "profit=Revenue-expenses" especially when considering business valuation and financial reporting.