Dickeson--Don't Be Baffled by Accounting Metaphors
And so on. Accounting, and its handmaiden profitability, are metaphors, a form of virtual reality. No one, including investors and the IRS, believes accounting profits or book values except when it's expedient, convenient or self-serving to do so. In computing a price-earnings ratio to value a business, what, for example, are "trailing earnings" compared with "profitability?" What does that "EBITDA" gibberish mean when looking at price earnings multiples? It means stripping away some of the opinion assumptions of "profit."
But, at the same instant, the dotcoms confront us with the harsh reality of cash flow. Maybe profit is an illusory opinion, but cash (or equivalent liquid assets) is a fact. A printer may comfortably survive with a 3 percent profit illusion on sales, but neither dotcom nor printing company can comfortably survive without liquidity—cash. The stock market investors' wishful projection of the current worth of future profits or earnings is, once again, simply an investor's opinion, another metaphor derived from virtual reality. So now we have both accounting and market investors' opinions of value.
Where does that leave us with our job cost estimates as a basis for establishing a price for a print job? Are "cost estimates" also metaphors of virtual reality? Of course they are. A cost estimate based on "production standards" of time and materials are estimates of what an accountant's opinion of profit might be if all cost assumptions came true—which never happens. Now we have three views of virtual reality.
Even currency itself has certain transitory value. Ask the currency speculators making a living on arbitrage between currencies. Look at the daily value listing of yens, euros, pounds, bats or pesos. And a 1990 dollar had a lot more value in purchase power than a dollar today.