| If profit was completely unambiguous, accountants wouldn’t have had to invent the word ‘EBITDA’. The article rather ambiguously says: > Profit is what allows the company to hire employees, grow, and sustain itself—it is quite literally what funds ongoing development There’s a key distinction between reinvesting profits - using accrued money to develop or acquire capital assets that can grow the company - and expenses. Cash used to ‘sustain the business’, ‘grow’ (increase sales) and ‘hire employees’, as well as ‘ongoing development’ in the sense of business development, is largely going in the ‘operating expenses’ bucket. It doesn’t come out of profits, it comes out of revenue and it reduces your profits. But in the case of a software focused organization, engineering staffing costs and ongoing product development can absolutely be reinvestment into developing software assets - but with a lot of caveats. So it’s certainly a little ambiguous for the original article to claim that all those things are ‘what profit is for’. Often they are preprofit expenses. |