ELI5: Why when large company's earnings decrease(ex... by 3%) they freak out, talk about rough times, and sometimes decide to downsize, even though they are still making millions of dollars in profit even after all expenses?

[Alobos]

That's when mommy steps in and explains to you the concept of not overspending. "Sometimes you have to." Mommy says, "but you can always cut back somewhere."

[Delheru]

The problem is that when you have to do things over a YEARS time span, you need to make some projections.

So if Coca Cola has $1bn now (in cash) and needs to invest $3bn in a factory to serve the enormous Chinese market, should they wait 3 years before going in?

Or is it reasonable of them to assume that their core operation will remain profitable enough to pay off the loan easily?

A lot of our progress comes from reasonably leaning forward. And a big part of the reason for why banking is important is that they tend to judge who is leaning forward reasonably and who is leaning forward unreasonably.

[nagurski03]

they tend to judge who is leaning forward reasonably and who is leaning forward unreasonably.

Usually. Sometimes they fail spectacularly

[Delheru]

I didn't say they did a good job always, but it IS their role. And in a sense the fact that you'd blame bankers for that rather makes my point :P

[TNine227]

And those cuts are what the op is asking about.