Not sure net income would tell you that much either. Many companies deliberately keep net income low by reinvesting in further growth. Think of Amazon's model. At least revenue gives you a sense of the upper limit.
But revenue has even more issues. You’ll end up hurting low margin companies the most.
If my company transacted $1T in some boring business model that netted a few million to the company coffers and employee pay then fining me on the $1T would simply wipe the company out many times over
Agreed, fine on net income is meaningless it just mean it won't hurt. Should be at least 10% of revenue like antitrust tend to do, this would make anyone think twice.
I don’t think GP is suggesting that the fines should be calculated based on net income. Just that you should evaluate the _impact_ by comparing to net income.
So in Amazons case you absolutely see a fine greater than their net income, but still only 1% of their revenue, and obviously such a fine would have a greater impact on Amazon than the equivalent 1% fine applied to Facebook.
Well, one could say that that is a problem about how Amazon is allowed to use some shady accounting tricks to declare low net income, and therefore that problem is the one that should be addressed directly.
So when you're having a bad year because you over-hired, or because some upstream service you depend on too much is abusing their power to squeeze you you should be entitled to break any law?
What if your company is set up with the usual tax tweaks where all net income is zeroed out by some licencing agreement about hand-wavy IP from a sibling company in the corporate family?
Taking it a step further, will you get a fine-back as a reward for breaking the law if your accountants manage to declare negative income?
Taking it a step further, will you get a fine-back as a reward for breaking the law if your accountants manage to declare negative income?
I think the GP meant that you should see the fine in relation to the net income, rather than that the fine should be computed in terms of the net income.
E.g. if a company has 100b revenue and a net income of 4b, then a 1.3b fine has a large impact. If a company has a net income of 50b, then 1.3b is peanuts.
(I don't necessarily agree, but just elaborating what they probably meant.)
An interesting way to look at it, the impact of a given percentage of revenue will certainly differ a lot between some tight margin reseller and a business that is basically market printing once established. But I can't parse the wording of the last sentence in GP post as "should be seen", it's to "should be". If there is ambiguity I fail to see it.
Neither revenue or net income will really represent the value of a company. Company evaluation would be more fitting, especially if the company is publicly traded.
