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Comment by munificent

5 hours ago

> if companies reported dollars in and dollars out live to shareholders at least we would have an idea of how the company is doing in a general sense.

Goodhart's law is knocking on your door right now.

8 comments

munificent

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mcoliver  4 hours ago

Help me understand what you are saying here. For those that don't know this one is "a measure becomes a target, it ceases to be a good measure".

I'm not advocating for a single metric that can be gamed. A business is fundamentally about dollars in and dollars out. Maybe add receivables in there and a few other metrics from the P&L. I'm not trying to be prescriptive here on purely cash in and out.

I do think there is a low friction way that companies could report daily certain metrics that over time would give their shareholders a sense of the company's health and trajectory.

  • ang_cire  4 hours ago

    Dollars/receivables in and dollars/deliverables out is just a question of rate, unless I'm missing something.

    If a 10 billion dollar company has a per-second dollar out/in rate of $1,000,000 due to actual organic business, a company with $2,000,000 can set up an LLC it buys and sells from, and legally 'swap' $1,000,000 a second back and forth in services "bought and sold" to mimic the appearance of the $10B company, to generate business interest/confidence/investment.

    That's an extreme example, but the point is that real-time money flow has nothing to do with the actual 'health' of a company.