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Which trains make money for the railroad?
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<table border="0" class="quoteOuterTable"><tbody><tr><td class="txt4"> ""<strong>Soo 6604 wrote:</strong></td></tr><tr><td class="quoteTable"><table border="0"><tbody><tr><td class="txt4">This is out of my league but I'm going to guess that any train that moves makes money for the railroad <span class="smiley"><img src="/emoticons/icon_smile_newlaugh.gif" alt="Laugh [(-D]" border="0" /></span> <span class="smiley"><img src="/emoticons/icon_smile_swg.gif" alt="Smile,Wink, & Grin [swg]" border="0" /></span></td></tr></tbody></table></td></tr></tbody></table><p> The answer to that might be "not neccesarily". MichaelSol recommended a book about Chicago, from the economic point of view. In it, a good case was made, for running some trains at what you and I migh consider *below cost*. The justification was, that while maybe the train didn't make a profit in the accounting sense, it did add some dollars to the bottom line, to cover some fixed costs that would be there whether a train was run or not.""</p><p> </p><p> </p><p> </p><p>Yes, exactly. In a strictly accounting sense, the "below-cost" train would be a loss, but generate cash and a positive cash flow. </p><p> It's the reason many businesses with heavy losses can afford to stay in business during years they are unprofitable. Many of the expenses a railroad incurs on the income statement comes from annual depreciation on "property, plant and equipment." It's a non-cash charge that can easily create a loss. </p><p>If I may add, it may also be good business to take a slight loss on a train than to axe it altogether and force the business to a competitor. </p><p> Ignatius. </p>
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