利潤

07:51 Aug 6, 2006 

Wenjer - You are confusing home economics with business economics. The word earnings and income are synonymous when applied to households, but they are very different when applied to businesses! Once again, (earnings | profit| return) = income - expense.

07:04 Aug 6, 2006 

So, it's loosely said, "Spend less than what you earn." It won't be return.

06:55 Aug 6, 2006 

sorry, Engish, loose

06:53 Aug 6, 2006 

Guess what guys? Since the Chinese version was translated from an English version, I referred back to the ENglish version and was surprised that the original English version actually employs a very lose term - "spend less than what you make".

05:53 Aug 6, 2006 

Just think of the necessity of having an accounting system with "Balance and Gain & Loss." Without such a system, it wouldn't be easy to figure out how efficient an enterprise is. And think, in which of those sheets we can figure out income and profit.

05:47 Aug 6, 2006 

In Hamo's suggestion there are such formulae which just don't serve right to explain the sense of the Chinese sentence. And that should have clarified your doubts? I am very surpirsed, Anastasia.

05:44 Aug 6, 2006 

On the other hand, you can say, "Your expenses must be less than your income." Even if it is not really what it shall mean, people understand it as "Your expenses must be less than your earnings." So, who got the right sense first?

05:41 Aug 6, 2006 

@anastasia: Just take "Your expenses must be less than your return" and "Your expenses must be less than your earnings" and ask for vote, you will see what comes out. Return is just wrong in this context.

05:38 Aug 6, 2006 

One quick question: Are you sure that Ross, Westerfield, and Jaffes wrote "dollars returns" and not dollar returns? I have never heard the former expression but among East Asians, and the names Ross, Westerfield and Jaffes do not appear very Asian.

05:32 Aug 6, 2006 

I am flattered that you would call me a her, as I have always believed that gender is subordinate to the individual.

05:05 Aug 6, 2006 

Returns can indeed be interpreted in a broad sense, on an investment level as Wenjer pointed out, or as in income - expense as Hamo highlighted. But it is a moot point. I am more concerned with is the phrase "expenses must be less than profits/earnings" sound? And it is Hamo who has addressed my concerns, hence the points to him/her. Though taking a different view, Wenjer has somehow addressed my concerns too in the notes above. But Hamo got it first.

04:48 Aug 6, 2006 

Hamo, neither of us is wrong about returns. "Corporate Finance" by Ross, Westerfield, and Jaffes (4th edition) defines returns in terms of "dollars returns" and "percentage returns".
Wenjer, if I get out of my accounting silo, I am able to see your point. But believe me, if you were to post this in an accounting forum, the ppl there will vote for "expenses must be less than income". If I am to delve into it, it could be a chapter of a book... ...
Thanks anyway for the stimulating discussion!

04:42 Aug 6, 2006 

Correction: In business, you just don't simply regard (income - expense) as return!

04:40 Aug 6, 2006 

I won't argue anymore. But believe me, having 利潤 or 賺得的利潤 translated as "return" is just wrong, not matter how broad or narrow you understand "return." In business, you just don't regard (income - expense) as return!

04:31 Aug 6, 2006 

To Hamo: Just look at the quasi-mathematical formulae you put into your suggestion and you will see the mistake. You can never measure a firm's operating efficiency with ((income/expense) - 1 > 0)!

04:26 Aug 6, 2006 

To Anastasia: When I was talking about investment with spending up front. It is another level. Return has to be understood in that level. Don't mix up two levels. Income doesn't equal to earnings. That's the point to your original question.

04:21 Aug 6, 2006 

Anastasia - Return and rate (a kind of ratio usually reserved for time, but not always) of return are not the same. Return on investment (ROI) is the ratio of return (profit) to investment. Many times people say return when they mean rate of return.

04:15 Aug 6, 2006 

Anastasia - You must be clear what you mean by investment. In most cases the term investment refers to the entire amount spent on a particular project. This amount is typically borrowed, but it can also be paid for out of savings (retained earnings).

04:12 Aug 6, 2006 

I have doubts on "returns" from a perspective different from that of Wenjer. When we talk about "returns", we are usually talking about percentages or ratios, but here, I think it is in terms of absolute dollar amounts.

04:08 Aug 6, 2006 

Wenjer - Anastasia was asking whether the term 利潤 was properly used. Simply, it is more common to compare income with expense, than it is to compare profits with expense unless, of course, the efficiency of the firm is in question.

04:08 Aug 6, 2006 

To Wenjer: Sure, 花費 has more to do with expenses than investments. But in order to invest, you have to spend up front. When a company runs, you are not advised to spend more than (income - expense). Or else, your investment get lost. Or else, your investment gets lost. In other words, you must control your spending in terms of "earnings," not in terms of "income."
Exactly what I was saying in my suggestion.

This argument is right, but summarily, it means that "investments must be less than earnings". But 花費 means expenses. "investments must be less than earnings" is right. "expenses must be less than earnings" makes no sense.

04:01 Aug 6, 2006 

Anastasia - Hamo did not mistake the use of the word return; rather, Wenjer has employed the term in its narrowest of senses: "earnings on investment" or "profit from investment". Once again, at some point these three words become interchangeable.

03:59 Aug 6, 2006 

Can you understand why peers agree with me and not with Hamo? You see, I don't mind the points. But what is right is right and what is wrong is wrong. It is not a mistake of the author. The text is all right. 賺得的利潤 is clear for earnings (profit earned).

03:26 Aug 6, 2006 

No no, I think Hamo has already clarified it for us
"The terms earnings and profits are synonymous in a business context, but I do not believe that you are looking for another way to say profits.

Your doubt about the author's understanding of the difference become income and profits is well founded, as one usually compares income with expense in order to determine a firm's profit."

He/she has addressed the crux of my question.

03:22 Aug 6, 2006 

In short, you have made a wrong pick. And I suggest you to call on the moderator to correct the mistake.

03:20 Aug 6, 2006 

Yes, I have doubt on it as well. That's why you'll notice I didn't mention it in my first note above.

03:18 Aug 6, 2006 

I was just to point out that Hamo mistook "return." Return is to be understood in a broader context of investment, not just in the context of "income vs. earnings/profit."

03:15 Aug 6, 2006 

Wenjer, if we go on, this will become an accounting forum. Thank you very much for your suggestion and help. Let me just say that I will translate it as earnings, but I will add a translation note.

03:12 Aug 6, 2006 

In other words, you must control your spending in terms of "earnings," not in terms of "income." Exactly what I was saying in my suggestion.

03:09 Aug 6, 2006 

Or else, your investment gets lost.

03:09 Aug 6, 2006 

Sure, 花費 has more to do with expenses than investments. But in order to invest, you have to spend up front. When a company runs, you are not advised to spend more than (income - expense). Or else, your investment get lost.

03:04 Aug 6, 2006 

To your last question: Different businesses have different cost structure. The profit margin doesn't necessary be more than 50% to survive. You need to think of "income" in terms of "investment." Just think of how to make sure of "gain and loss."

03:04 Aug 6, 2006 

I think I now understand where you are coming from. But the word 花費 has more to do with expenses rather than investments.

02:59 Aug 6, 2006 

If you believe that "income - expense = profit," you just look away from the investment and that would bring your company into a great danger. Believe me!

02:53 Aug 6, 2006 

You are telling me that if the cost of the firm is $5, the company MUST sell at more than $10 in order to make a profit of more than $5? You are telling me that the margin for all firms must be more than 50% in order to stay alive?

02:49 Aug 6, 2006 

"As long as profit is positive, why should we be bothered whether spending is less than profit or not?" If you don't bother to earn more than you spend, your company goes bankrupt in a sure way!

02:45 Aug 6, 2006 

Income - Spending/Expenses = Profit/Earnings
As long as profit is positive, why should we be bothered whether spending is less than profit or not? On the other hand, spending must be less than income so that you'll earn profits.

I'm not awarding the points to Hamo because I prefer "return" to "profit" or "earnings", but because he/she confirms my suspicion above.

02:44 Aug 6, 2006 

It is well known that ROI (return on investment) is ((income - expense)/investment), not ((income - expense)/expense). Think of the accounting system with "Balance and Gain & Loss," not just "Expense & Income," then you will see what I am talking about.

02:33 Aug 6, 2006 

If the translation of the sentence in question is to be correct, think about the questions I asked above.

02:32 Aug 6, 2006 

Is there anything wrong to say that "your spending must be less than your earnings" or that "your spending must be less than the profit you earn"? Isn't it funny to say that "your expense must be less than your return"?