They actually teach people in school now that having money in reserve at a company is bad because it's not helping you make money.
Those words have literally come put of my future brother in laws mouth, who works in the banking industry. He's been put of school a year or two, and has essentially said, if you have a rainy day fund as a company, you're not maximizing your potential revenue (or some other hogwash like that)
And then we wonder why the financial industry has a boom bust cycle.
That's the thing, in theory that's correct - until it rains.
But since our entire economy is based on unjustified optimism, it can't rain.
I don't agree with the statement at all. It fails to account for any variance in the money coming in. But, I'm not going to argue with my future brother inlaw. Not worth it.
It's like you said, he's right, until he's not. The entire company can go under if they have a few bad quarters.
That's my point, if you assume it stays sunny, buying an umbrella is a wasteful expenditure.
And in business terms, not investing a certain part of your capital means, you don't get a return on that investment (and interests are most likely much lower), so effectively you lose money.
What our economy and our CEOs often ignore is, that the universe doesn't end next quarter. Holding capital back essentially smoothes the overall profits/losses over time, that's awesome for workers, customers and stakeholders - but CEOs need line go up, so they can get a bonus. So no money is held back.
Sorry, poor wording on my part. I meant I don't agree with the statements my future brother inlaw made.
The reasoning that gave us just-in-time delivery and supply chain breakdown.
Its the same as a code review. Submit a code review for 1 file, get 5 comments. Submit with 1000 files, get a 👍 looks good!
I see you’ve got an arsenal of economy based memes. This’ll do
Tbh usually they just email me "hi here's a credit limit increase" and I'm like "k sure thx"
I have a small business and a full time job. As such, I have a few bank accounts.
Today I was moving funds to put in my pocket for the weekend, reimburse money I borrowed from my business when I moved a while back (still not quite back on track 😬), some to an investment acct, some to savings.
And I noticed when I'm moving money to savings, or my business, I'm liberal: "$100," "$150." But when I move money to my spending account I become very stingy: "$53.82," "107.64"
I'm not justifying anything it's just an interesting parallel that I noticed earlier today (payday 😎)
Edit: I really do it to create nice even $xx00.00s in my accts that don't spend money so I can easily track things like interest and stuff. And the pennies all go to the account that pays dollars and cents out, I guess.
