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Originally Posted by The North One
lol it's this thing called revenue, not sure if you've heard of it.
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Quote:
Originally Posted by dimondpark
But Google ranks 22nd in the Fortune 500, which is based on revenue-Higher than Bank of America, Boeing, Microsoft, the Home Depot, Pepsi, IBM etc.
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Revenue is a pretty meaningless metric however. It’s impossible to compare against different business models with different margins (or especially between ‘industrials’ and banks).
E.g., in Google’s business they create revenue by using their IP, the labor of their employees, and some small percentage of that revenue that it costs them to operate data centers. Software company gross margins are normally 80-90%. In Wal-Mart’s business, they create revenue by buying a thing for $1 and selling it for $1.20 (and then subtracting all the costs for marketing, labor, warehousing and distribution, etc). Most of it is just “pass-through” and the real value added by the business, before operating expenses, is arguably 20 cents rather than the $1.20 reported as revenue.
The only reason Fortune uses it is because it is more readily available or easily estimated for private companies.
Headcount is also pretty meaningless. Obviously 1,000 programmers or financial analysts earning $100k+ are more important to a local economy than 1,000 retail clerks or warehouse packers.
If you want to compare the economic impact of businesses, then some combination of profits, total wages/salaries, and investment (capex and R&D) would capture most of the benefits accruing to most stakeholders (owners, employees and the company’s own capital stock).