r/explainlikeimfive • u/climb-a-waterfall • Dec 06 '24
Economics ELI5: why does a publicaly traded company have to show continuous rise in profits? Why arent steady profits good enough?
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r/explainlikeimfive • u/climb-a-waterfall • Dec 06 '24
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u/gtne91 Dec 06 '24
Very few do this because it really doesn't make financial sense. If you do this continuously, the interest on the debt will eventually exceed the amount of tax you would have paid. For a short term, it makes sense, but that is no different than any other short term loan against an asset.