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(06-21-2021 09:40 PM)Baleen Wrote:  

(06-20-2021 06:20 PM)Cal1362 Wrote:  

(06-20-2021 10:01 AM)doss2 Wrote:  

(06-15-2021 05:55 PM)Baleen Wrote:  

(06-15-2021 04:10 PM)Captain Bearcat Wrote:  Wow. I never would have guessed that a car dealer would have a billion dollars in sales.

Since I like to be the facts guy, here's some interesting backup...

https://www.autonews.com/assets/PDF/CA114804323.pdf

Now to be fair, revenues are artificially inflated at dealerships because they're claiming the retail sale price as revenue. Obviously their costs are astronomical, so profits are a tiny fraction of what their topline is (usually about 1-2%).

Not artificially inflated, it is called GAAP.

As a career auditor and accountant, that is why Net Income or Operating Margin or even Cash Flow Margin is far far more important than Revenue or Sales. If you think it's interesting for car dealerships, you should see how Price Charged to "Profit" works for Hospitals. But those are topics for another conversation.

Not interested in getting into a GAAP-measuring contest on this with my fellow financial types. Personally I have tons of problems with how certain industries calculate certain financial metrics via GAAP, but that's a boring conversation for a different forum.

In my world, we obsessed over non-GAAP cash oriented metrics, like cash EPS, EBITDA, etc. as we found them to be far more useful in telling a story about a company's health than GAAP EPS, net income, EBIT, etc. Just because something is GAAP, doesn't mean it doesn't artificially inflate or deflate metrics (and definitely doesn't mean it tells a consistent story). As with most everything in life, the key is in the footnotes...

Re: hospitals - don't even get me started on this...I remember tearing my hair out as an analyst trying to interpret their financials!

My favorite example of why net income & revenue don't matter: Lehman Brothers. In January 2008 it filed its most profitable year ever, with a 26% increase in annual revenue. In March 2008 it filed its 55th consecutive profitable quarter. In September 2008 it filed for bankruptcy.

There was no allegation of misreporting. The complete story was there for anyone looked beyond the income statement and took even a cursory look at the cash flow statement. (Lehman had negative $30 billion in CF from operations in FY2007 - homeowners were behind on their loan payments, which don't show up as income statement losses until the home is foreclosed on)