Re: JD reports six straight quarter of lower earnings

Posted by wisbaker on May 17, 2019 at 13:56:58 from (173.30.37.8):

In Reply to: JD reports six straight quarter of lower earnings posted by Bruce from Can. on May 17, 2019 at 07:14:41:

A few weeks ago the smear news was reporting that they'd gotten a hold of Trump's tax returns from the 80's and 90's and that he lost a billion dollars (mostly of other people's money) and didn't suffer a reduction in "lifestyle". A big company's loss ( or a real estate developer's loss) might not be what the average person would feel is a loss. Part of that loss was deprecation, a guess at the reduction of value that assets they have incurred in the normal conduct of business. Also is that loss is research and development expenses and on anything they sold for less than it's book value. Let's look at an example of what can be a loss, say they have an assembly line all set up to make a piece of equipment. Let's assume that they have run this line for 5 years and made $5,000,000 each year they ran it. They decide to shut down the line and scrap it out. Their book or residual value of the line may be $1,000,000 meaning they have written off all but $1,000,000 of what they spent to build that line. They scrap the line and get $250,000 so they have a loss of $750,000 dollars, yet over the last 5 years they made $25,000,000 on this line, but for this year they can declare a loss of $750,000. But they could also have the opposite they close the line and scrap it, same $1,000,000 book value but they sell the line for $1,250,000 so they have a $250,000 profit but since it's a sale of a capital asset they are taxed on capital gains rather than regular income so there is some advantage in taking more depreciation than you incurred. As other have eluded to they didn't necessarily "loose" money they didn't meet their target, the report it the sixth straight quarter of lower earnings as opposed to six straight quarters of loss. It is not unreasonable for them to have lower earnings or even a quarterly loss if business is slow or they're tooling up for new products or shutting down older lines. Also remember that the government has allowed companies to accelerate their depreciation, to take more depreciation than they incurred as a way of stimulating business. Remember some of the tomfoolery that occurred in places like Enron where they sold assets and declared a profit on the sale but pushed the unrecovered value or book value into the remaining assets until they had very little left with exceptional value like bolts and other bits of left over construction material worth a few thousand dollars on the books for millions. But heck if we're Farmers or any kind of businessmen we should know and understand all of this.

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