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Depending on Alphabet’s method of accounting for it, it is very possible YouTube is not profitable. No doubt it is cash flow positive and probably throws off a bunch of cash, but it could take a while to turn a profit if they are carrying a bunch of capitalized expenses or something.
The film industry does play some games by setting up different companies and then accounting for them separately. I had more in mind just normal GAAP accounting of an entity.
For instance, say you spend $1B on your infrastructure, then get annual revenues of $100MM on operating expenses of $50MM. You are clearing $50MM every year, but the $50MM isn’t necessarily profit and you may not be profitable until you’ve finished wiping the $1B of capital expense off your books by amortizing it over some defined period of time.
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[–] Thisismyvoatusername 1 point 4 points 5 points (+5|-1) ago
Depending on Alphabet’s method of accounting for it, it is very possible YouTube is not profitable. No doubt it is cash flow positive and probably throws off a bunch of cash, but it could take a while to turn a profit if they are carrying a bunch of capitalized expenses or something.
[–] [deleted] 0 points 4 points 4 points (+4|-0) ago
[–] Thisismyvoatusername 0 points 1 point 1 point (+1|-0) ago
The film industry does play some games by setting up different companies and then accounting for them separately. I had more in mind just normal GAAP accounting of an entity.
For instance, say you spend $1B on your infrastructure, then get annual revenues of $100MM on operating expenses of $50MM. You are clearing $50MM every year, but the $50MM isn’t necessarily profit and you may not be profitable until you’ve finished wiping the $1B of capital expense off your books by amortizing it over some defined period of time.