Data Update 5 for 2023: Profitability, Returns and Value

One of the lessons relearned in 2022 was that the end game of any business, no matter what its potential and how many users it has, is to make money. In this session, I draw a distinction between different profit measures from gross to operating to net profit, and how the test of making money gets more difficult as you move down the income statement.. I scale profits to revenues to estimate margins, and examine the distribution of margins, and differences across geographies and industries. I look at accounting returns, standing alone, and relative to the costs of raising capital to conclude that in 2022, about 70% of all publicly traded firms earned less than their costs of equity (capital), some for good reasons, but many for bad ones. Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate5for2023.pdf Post: https://aswathdamodaran.blogspot.com/2023/02/data-update-5-for-2023-earnings-test.html Learn more about your ad choices. Visit megaphone.fm/adchoices