- Profitability Metrics gain in value if you compare them across larger time spans and across different companies in the same industry.
- e.g. Return on Equity for just a single year will only tell so much about a company.
Ratios
Profitability of Startups
- Profitability may be low or even negative
- Growth is more important than profits
- Liquidity still important
- dependent on external financing
- should external financing stop, difficult situation
- sometimes negative profits extend beyond startup phase
- look at Uber or food delivery services
- still “growing”/trying to get more market share
- or look at OpenAI - still not profitable