You clearly never attended Accounting School.
P&Ls use math like this all the time…. but then, I don't presume to understand them, I just focus on the results.
You clearly never attended Accounting School.
P&Ls use math like this all the time…. but then, I don't presume to understand them, I just focus on the results.
You're partly right. On the Balance Sheet (the other part of a P&L) your profits and losses taken together have to sum to 100% (or, more correctly, a zero sum). This is why the "profits" side alone add up to 103%. It hasn't got the losses side added in yet.
That's accounting for ya! If you take only one side or the other of the ledger, you might end up with exactly those 'wacky numbers'...
I agree with TS! That way all the arguments relating to whether 103% of industry profits is possible will be available in 200% of the threads related to that topic.
I'd be more interested if you actually provided a reasoned response rather than just relying, as you often seem to, on personal insults. But perhaps third grade math is all you ever mastered, so I guess one uses whatever one has.
The underlying problem, I think, is that from a mathematical point of view one cannot divide two non-scalar quantities. Profit/loss is non-scalar because it has direction and magnitude. A more valid and, I think, useful measure, would be profit, p, relative to market mean profit, 𝒫, which would be (p - 𝒫)/p. That is unambiguous in magnitude and sign.
Do you even think before you post or do you just enjoy blurting out bulls**t?
You did it again - you studiously ignored every point that I made, and instead produced yet more examples inapplicable to the issue. Are you actually reading and comprehending what I wrote or just railing against my conclusions? There is probably not much point continuing this further but, for the record:
Your BMW example is fine, but not pertinent because car sales are, by definition, positive, so summation over any space yields only positive terms and thus no ambiguity. And, if you had read my post you would have noticed that I was not advocating eliminating anything - just pointing out that the method used above to calculate profit share leads to obvious ambiguities and non-meaningful results in many situations.
Your restatement of the original case also doesn't address the issue - it is the example that triggered this discussion in the first place and the reason that others, including me, pointed out that the method used is mathematically flawed. Others produced counterexamples to show how it could give meaningless results while I demonstrated more formally how it could also give the same results for completely different conditions. You dismissed the others and simply ignored my arguments, instead just insisting that it works. Attempting to produce your own counterexamples that show where you think it does work is not a valid argument. Counterexamples (even if correct and applicable) refute rules, theories or hypotheses - they cannot be used to refute other counterexamples.
And just a suggestion - quit making vague boasts about your math training. Physicists and mathematicians (such as myself) can spot a layperson instantly.
Agreed, although I wasn't actually even suggesting that one should ignore the industry losses - just that in this situation one cannot reasonably divide one number by the sum of a set of positive and negative numbers, since even the sign of the answer is ambiguous in what it implies - i.e. a positive fraction could be either a profit in a profitable sector or a loss in a loss-making sector, while a negative fraction could be a profit in a loss-making sector or a loss in a profitable sector. It represents a sadly typical misunderstanding of basic arithmetic.
Not WILL buy another brand. They CAN buy another brand. There's a difference.
According to recent rankings by ASCI, Samsung has pretty good customer satisfaction in the USA:
Something can make mathematical sense, but still be a poor way of presenting data in such a way as to make the most sense to the most people. Especially if most are not accountants :)