How can big corporations run with huge losses?

Question

I just don't get how huge corporations like ford and gm can run inspite of showing huge losses. Where do they get the money to run the company like pay employees or pay for day to day expenses inspite of showing BILLIONS of dollars in loss.

Answer 1

Loss (or profit) is only the difference between revenues and expenses for a particular period ( quarterly, annually) and is computed in accordance with accounting principles which are rather complex. Loss or profit does not equal cash and other liquid assets of the corporation. Corporations run as long as they are solvent i.e. have cash to burn.

Answer 2

When you think of billions of dollars, you have to put that in perspective. Billions of dollars is probably just a couple of weeks of expenses for them. They get the money from reserves from previous years, and from loans. They have to keep going if they can and hope for a resurgence; because, otherwise, people would lose their jobs and investors would lose their money.