Quote:
Originally Posted by xelasnave
I had to laugh this morning..Rio T has jumped because they have announced 14,000 folk will lose their jobs... so the stupid see this as meaning profit will be greater because overhead will be lower... bit of a long bow bow draw there... businesses cut jobs to maximise profit and I am sure Rio would have had a trim ship before so a cut now means nothing more than they expect less business, less business means less turnover which for the most part means less profit.... Assuming that with high turnover they were using all economies of scale one should expect from a big player at lower turnovers one must always face smaller economies of scale.... so it ammusses me how the market can grab at news of job cut backs as good... if one has a business and one has to cut jobs it means things are getting worse not better which should see less confidence about the future....
Still what would I know I still can not understand how borrowings can move from one side of the books to the other and turn from debt to income... business and basic money making rules sure have changed over the years...
alex
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Rio has 50,000 million AUD in debt after buying ALCAN at an inflated price. It is doing this to drop its debt by around 25% otherwise it would probably go under.