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by dragontamer 1994 days ago
> they're spending a lot for things like building factories

Building factories is CapEx. CapEx does NOT affect profits, only cash flow.

Factories indirectly hurt profits through depreciation. But its a very round-about way of doing things. The important thing is that profits / loss is a forward looking statement implicitly.
1 comments
andrewmcwatters 1994 days ago
> CapEx does NOT affect profits

Yeah, yeah, and paying a mortgage doesn't affect my savings rate.

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dragontamer 1994 days ago
What?

"Savings rate" is defined as monthly disposable income. Your mortgage absolutely lowers your savings rate.

Your mortgage would also affect your cash flow. If we're talking about profit/loss, the interest-portion of your mortgage absolutely affects your profit/loss.

Only the principle portion of your mortgage statement is "free" from a profit/loss perspective. Which it is: you can always leverage the principle into a HELOC or other financial instrument if you need emergency cash.

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