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SarahBell

Maths, Economics, News And Bloxs

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Its called Doublethink

The power of holding two contradictory beliefs in one's mind simultaneously, and accepting both of them....To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just so long as it is needed, to deny the existence of objective reality and all the while to take account of the reality which one denies — all this is indispensably necessary. Even in using the word doublethink it is necessary to exercise doublethink. For by using the word one admits that one is tampering with reality; by a fresh act of doublethink one erases this knowledge; and so on indefinitely, with the lie always one leap ahead of the truth.

If you want a vision of the future, Winston, imagine a boot stamping on a human face forever.

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It's all blox

News headline on bbc this morning about how network rail (a not for profit operator) makes £1.52bn pre-tax profit

But

http://www.guardian.co.uk/business/2009/ju...ail-profit-debt

Network Rail debt hits £22bn

Rail infrastructure company Network Rail makes £1.52bn pre-tax profit but debt grows dramatically

So how have they made a "profit" surely you take the profit to pay off the debt and then they haben't made a profit but are still in debt?

Or do they make a profit and not pay off the debt?

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It's all blox

News headline on bbc this morning about how network rail (a not for profit operator) makes £1.52bn pre-tax profit

But

http://www.guardian.co.uk/business/2009/ju...ail-profit-debt

Network Rail debt hits £22bn

Rail infrastructure company Network Rail makes £1.52bn pre-tax profit but debt grows dramatically

So how have they made a "profit" surely you take the profit to pay off the debt and then they haben't made a profit but are still in debt?

Or do they make a profit and not pay off the debt?

Age old accounting question which I get asked at every Board meeting. Accounting profit means you have more income than costs and in both cases, this can be accrued figures. i.e. you haven't paid the gas bill yet, but you know you have used the gas so will have to pay it in the future. This is a cost you accrue at the time you produce your accounts and the same works with income.

The thing you are confusing is cashflow. You can have positive cashflow, (more cash coming in than going out), even if you make an accounting loss. You simply get your customer to pay quicker than you pay your suppliers, or you convince a bank to lend you money. Lots of businesses function this way, but the ones that survive are the ones that become profitable in the future.

You can have negative cashflow even if you are making a profit. e.g. each day you sell your product for more than it costs, but your customers are slow in paying and you have to buy the product with cash on top of the cash you have used to buy the shop. In order to finance the gap between money coming in and going out, you will have to get shareholders to put money in, or borrow it from somewhere.

Railtrack's accounting profit, (if it is accurately calculated), may have already or will in the future, be used to reduce debt. That is if the Director perceive that to be the best use of the money.

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That's a great line. Is it a quote?

Yup. In my signature is a link to a FREE audio book version, you don't have to sign up or anything, its very well read too. You must read the book or at least listen to the audio book, the film doesn't do it justice. Its not about wearing grey clothes, being depressed and smelling of cabbage, its an unparalleled critic of totalitarian state power, the perpetual war economic model and how state propaganda can be used to make a critical section of the public servants totally subservient to the will of those in power. Its not a book thats out of date, despite the year it was written, the central criticism of power and propaganda are just as relevant today.

http://en.wikipedia.org/wiki/Nineteen_Eighty-Four

Edited by enrieb

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think of it like this.

you have nothing.

you see a nice flat for sale...its 2003 by the way.

you approach Northern Rock and say you want to buy the flat, for BTL.

Applegarth gives you £100K in exchange for you paying £500 per month interest.

you now have debt of £100K

you rent the flat for £600 per month.

thus, you have 100K debt yet 1.2K profit at the end of the year.

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Railtrack's accounting profit, (if it is accurately calculated), may have already or will in the future, be used to reduce debt. That is if the Director perceive that to be the best use of the money.

Pay off debt... or pay successful profit-making Director more money. Hmmm.

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Pay off debt... or pay successful profit-making Director more money. Hmmm.

Your just fishing for a cynical answer, profit making talent doesn't come cheap. They could earn more in the private sector don't ever forget that.

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