A few weeks ago, Frugal Dad’s infographic on the six media conglomerates that control 90% of American media consumption cropped up across the Web (scroll down to view the graphic).
“Total 2010 revenue was $275.9 billion,” it told us. To put that in context, “that’s $36 billion more than Finland’s GDP, enough to buy every NFL team 12 times, and five times the government bailout of General Motors.”
Furthermore, “in 2010, they avoided $875 million in US taxes; enough to double FEMA’s budget or fund NPR for 40 years.”
Let’s take a second here. Thanks to Tow-Knight’s crash course in accounting, I’ve been better able to distinguish among financial terms, and Frugal Dad’s infographic equivocated profit with revenue. See, revenue is how much money a company is bringing in before recouping its costs and paying taxes. By no means is that $275.9 billion pure pocket money.
Then the infographic tells us that the big six evaded taxes. However, due to the way that companies could elect to do their accounting, that could partially be explained by cash flow and accounts receivables. Because companies can undertake such expensive projects, often subcontracting one another’s expertise and services, they shake over contracts that promise payment within a 30 to 180-day window. The expected payments, not yet received, are called accounts receivable. Meanwhile, this affects cash flow, which is the exact amount that a company has on hand to cover immediate expenses such as salaries.