When a company looses $5 Billion, where does it go

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T

thatsright

Diamond Member
May 1, 2001
3,004
3
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So lets say Ford/GM, or any other american manufacturer looses $5 Billion in the last quarter. Where does the money go, or not go? Do they have expenses of $10 billion and only sell $5 billion worth of cars, and thus have a $5 billion dollar deficit? Are they calculating revenue of Q2 08 compared to Q2 of 2007?

Do companies pull $5 billion out of reserves to break even? Can they just not afford to pay their suppliers? Do they just take on more debt to cover their losses?

Just asking as when I watch the news and a company reports a $5 billion loss, its gotta be going somewhere.
 
I

isekii

Lifer
Mar 16, 2001
28,578
3
81
Jerry: So, we're going to make the post office pay for my new stereo now?
Kramer: It's a write-off for them.
Jerry: How is it a write-off?
Kramer: They just write it off.
Jerry: Write it off what?
Kramer: Jerry, all these big companies, they write off everything.
Jerry: You don't even know what a write-off is.
Kramer: Do you?
Jerry: No, I don't!
Kramer: But they do. And they're the ones writing it off.
Jerry: I wish I had the last twenty seconds of my life back.
 
B

BrownTown

Diamond Member
Dec 1, 2005
5,314
1
0
ITs not that complicated, you spend $20,000 to make a car and only sell it for $18,000, then repeat that a million times and your set... :p
 
A

alpineranger

Senior member
Feb 3, 2001
701
0
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Could come out of their cash reserves (companies like that have billions of cash on hand), or they could take on more debt (by issuing bonds or borrowing from banks). That said, it's not like at the end of the quarter they write a big check somewhere and say, well, here is our deficit. It happens over the course of the quarter.

If they cannot afford to pay their suppliers (which implies that they don't have cash reserves and they can't borrow), they are technically bankrupt.

Actually it is a little more complicated than that because there are options to borrow your working capital. So they don't spend 20k to make a car, they spend hundreds to finance the 20k, and when they sell it they pay back the loan, and the cost is the cost of financing that money during that time. Dealerships do the same thing.
 
nick1985

nick1985

Lifer
Dec 29, 2002
27,153
6
81
Originally posted by: isekii
Jerry: So, we're going to make the post office pay for my new stereo now?
Kramer: It's a write-off for them.
Jerry: How is it a write-off?
Kramer: They just write it off.
Jerry: Write it off what?
Kramer: Jerry, all these big companies, they write off everything.
Jerry: You don't even know what a write-off is.
Kramer: Do you?
Jerry: No, I don't!
Kramer: But they do. And they're the ones writing it off.
Jerry: I wish I had the last twenty seconds of my life back.
Click to expand...

:laugh:
 
T

thatsright

Diamond Member
May 1, 2001
3,004
3
81
Originally posted by: BrownTown
ITs not that complicated, you spend $20,000 to make a car and only sell it for $18,000, then repeat that a million times and your set... :p
Click to expand...


Ok, but if a company losses $5 Billion over the course of 13 weeks, ANY company would shut down and fold quickly. How can a company stay open while this is going on?
 
BassBomb

BassBomb

Diamond Member
Nov 25, 2005
8,390
1
81
Originally posted by: thatsright
Originally posted by: BrownTown
ITs not that complicated, you spend $20,000 to make a car and only sell it for $18,000, then repeat that a million times and your set... :p
Click to expand...


Ok, but if a company losses $5 Billion over the course of 13 weeks, ANY company would shut down and fold quickly. How can a company stay open while this is going on?
Click to expand...

LOSES
 
A

alpineranger

Senior member
Feb 3, 2001
701
0
76
Originally posted by: thatsright
Originally posted by: BrownTown
ITs not that complicated, you spend $20,000 to make a car and only sell it for $18,000, then repeat that a million times and your set... :p
Click to expand...


Ok, but if a company losses $5 Billion over the course of 13 weeks, ANY company would shut down and fold quickly. How can a company stay open while this is going on?
Click to expand...

They probably aren't consistently losing several billion a quarter. Many times a company will take a huge one time hit because they do something like purchase another company. Also, see what I said earlier about borrowing working capital.
 
B

BrownTown

Diamond Member
Dec 1, 2005
5,314
1
0
Originally posted by: BassBomb
Originally posted by: thatsright
Originally posted by: BrownTown
ITs not that complicated, you spend $20,000 to make a car and only sell it for $18,000, then repeat that a million times and your set... :p
Click to expand...


Ok, but if a company losses $5 Billion over the course of 13 weeks, ANY company would shut down and fold quickly. How can a company stay open while this is going on?
Click to expand...

LOSES
Click to expand...

I dunno, how much money do they still owe to all those union workers if they just fire them all and go bankrupt?
 
C

CasioTech

Diamond Member
Oct 1, 2000
7,145
9
0
Originally posted by: isekii
Jerry: So, we're going to make the post office pay for my new stereo now?
Kramer: It's a write-off for them.
Jerry: How is it a write-off?
Kramer: They just write it off.
Jerry: Write it off what?
Kramer: Jerry, all these big companies, they write off everything.
Jerry: You don't even know what a write-off is.
Kramer: Do you?
Jerry: No, I don't!
Kramer: But they do. And they're the ones writing it off.
Jerry: I wish I had the last twenty seconds of my life back.
Click to expand...

:thumbsup:


 
T

Turin39789

Lifer
Nov 21, 2000
12,218
8
81
Originally posted by: mb
Originally posted by: JohnCU
Originally posted by: tranceport
Originally posted by: mjuszczak
Let me tell you - I wish people could spell.
Click to expand...

One person cannot spell and we have to point it out?
Click to expand...

Such is the responsibility of ATOT.
Click to expand...

Err what's going on here?
Click to expand...

So, they spend more than they make, but they have 399999999 billion in the bank so they last a little while longer
 
Gothgar

Gothgar

Lifer
Sep 1, 2004
13,429
1
0
Originally posted by: isekii
Jerry: So, we're going to make the post office pay for my new stereo now?
Kramer: It's a write-off for them.
Jerry: How is it a write-off?
Kramer: They just write it off.
Jerry: Write it off what?
Kramer: Jerry, all these big companies, they write off everything.
Jerry: You don't even know what a write-off is.
Kramer: Do you?
Jerry: No, I don't!
Kramer: But they do. And they're the ones writing it off.
Jerry: I wish I had the last twenty seconds of my life back.
Click to expand...

win forever, hahaha love that scene
 
N

nanette1985

Diamond Member
Oct 12, 2005
4,209
2
0
The answer to the OP's question is about cash-flow, not about profit and loss.

Not that it's a great thing to lose 5 billion, of course.
 
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