Accounting 101 for downrampers to avoid looking stupid
Some really short sighted people with their doomsday prophecies and a focus on a loss in a prior period, stop staring at your feet and whats behind you . The explanation is simple
When you start off a business
- you have fixed costs, rent, initial capex, initial R&D proof of concept
-Variable costs such as employment, marketing
-You would generally over spend in these areas at first so that you have excess productive capacity otherwise you cannot grow
-Should also note that APT does not sell widgets so there is no physical product adding to costs that needs to be produced
So yes you spend a little more to turn the wheel at first and you end up with the loss
-As the revenues grow you take up the productive slack and increase your spend in the areas required
-Here is the big one, You have already established the fixed cost base so as incoming revenues increase
the corresponding cost increases are marginal eg the server system can process 1,10 or 100 million transactions using same cost
-So you go from spending a $1.10 to make $1 to a positive cashflow position where new revenue costs less than a $1 to produce
-AKA the tipping point
As a final point those that want to dwell on the bad debts, if you don't pay you cant use it again, eventually the system will weed out the non payers this a trick me once scenario not twice. So the percentage may stay at a nominal rate but why would it increase, once you get rid of the bad apples they are gone.
This company is growing revenue in an exponential manner, the costs are not going to accelerate in the same manner there is no logical reason for them to do so.
So endeth the lesson GLTAH I see green for Monday please DYOR
