And the profits roll......

Here is a simple explanation of Profit vs margin

Now ... for those of you who went to government schools, let's expand on the explanation. Let's say that the total gross revenues for a company for one year equal $1,000,000. That's a million bucks. This company spends $930,000 to bring in that million. The difference between the one million and the $930,000 is $70,000. That's your profit. Divide the $70,000 by the one million and you get 0.07, or 7%. That's your profit margin. Now let's say that the very next year the company sells twice as much product the second year and brings in two million bucks. Let's also say that the cost of making those products doubles as well .. to $1,860,000. How much money did you have left over? Those of you who went to government schools get out your calculators .. the rest of you can figure it out in your head. You have $140,000 left over. That's your profit.

Wait! Your profits have doubled! How dare you? What are you doing, price gouging? These are excess profits -- windfall profits -- and the government ought to step in immediately and take them away from you, you greedy capitalist pig!

Hold on ... before we get carried away with our little price gouging rant here, let's grab those calculators again. Divide the $140,000 in profits by the $2,000,000 in gross receipts and what do we have? Why, it seems the answer is once again 0.07, or 7%! The profits have doubled, but the profit margin remains exactly the same!

The problem here is that, thanks to the hideous education the vast majority of Americans have received at the hands of the government, few people know the difference between a profit and a profit margin. Whey they read that oil company profits have gone up they have no educational basis upon which to balance the fact that oil company revenues have also gone up ... thanks to the increase in the price of crude oil. Revenues go up. Profits go up. It's not really that hard to understand.

 

Psssssstttt .... you missed one important point in the first post.

Profits were up 9.3% from the previous year, while sales rose 2.2%

Now show us the calculations that allow the sales to go up 2.2% while keeping the proft percentage the same and increasing the total profit by 9.3%. That would be interesting to see.

 

Again, due to woeful economics education and obvious socialist slant the point of profit MARGIN is again missed. Please refer to the end of the following article. Exxon profit margin 9.4 cents on the dollar. Microsoft 31.6, maybe you should be mad at them too.

http://www.usatoday.com/money/industries/energy/2006-04-27-xom_x.htm

 

Isn't the world mad at Microsoft?

 

Bottom line is what are these companies doing to give back. Exxon can not speak for sure. Microsoft I know is sitting on an ungodly amount of cash and then complain because they can not hire enough US workers so they must import them instead of train them. Also they like to play the contractor game to get around paying benefits. It's not because they can not afford either. it's because of corporate greed and it is killing this country.

 

It goes to build those pretty brick walls along the highway to protect the rich guys from having to hear a truck go by because they were idiots in the first place for buying a home next to a highway. If you want to live that close to the ramp, buy the ramp idiot. (Seen any of those walls protecting the cheap part of town???)

It goes to pick up all that ugly construction trash on the highway because New York invaded North Carolina, won, and now they're plundering the landscape with cheap crackerbox homes not built by Americans but Latino's. That house you bought may look good on the outside but even the latino who built it wouldn't pay good money for it.

It goes to add new highways to service the richest part of town that really doesn't need a highway yet.

It goes in some currupt politicians friends pocket who got the contract to provide million dollar road signs.

Do I need to go on with this list. You know where it goes, you just can't admit it.

 

Why should they give back??? You make it sound like they got a gift.

How much do you make a year? $50K? Hey, there are people walking the streets of Raleigh who see you as you see Microsoft. To them, you're sitting on an "ungodly amount of cash". You should give all your money to them (not counting food, of course, we wouldn't want you to starve, or you wouldn't be able to "share" next year).

As I taught my kids, sharing is good and nice. But it is not required.

Don't believe me? I need to borrow your car every night between the time you go to bed and the time you wake up, after all you must share, and you're not using it then. Please PM me with your phone number so I'll know when to pick it up.

 

So let us accept that the world is all about me. How do you explain "barn raisings" that used to happen. Is any charity worth it? Let me ask where is this country going? The corporations continue to offshore jobs for the bottom line and weaken this countries national security. At some point it will end and we will be the country every one is fleeing. Who is going to buy all the furniture that China is making. If you are not working are you going to buy the new car. We are allowing our manufacturing jobs to leave this country. We are allowing the corporations to line the pockets of politicians so that we give them expansion funds, but only if you are big enough. I do not have the answers, but when I see what is happening I wonder how we are expecting to make it. The world is not about me as I am only here a very short time. I guess I should cash in and take advantage like others and not worry about because it will not affect me when I am dead.

 

Pirate, how do you explain Toyaota, Subaru, Nissan etc all coming here to open new Mfg plants? Hyundai just opened a 350,000,000 facotry. Toyota a multi million truck factory. This is not just those factories, but associated work.

We have the best productivity in the world, but not the cheapest labor.

 

Is that the sound of goal posts being moved? I believe the economics eduaciton was to be how your example would work not if there was a higher profit but lower volume business out there. :lol: :lol:

 

These plants by pass import tariffs, reduce shipping costs, and creates another marketing tool of "built in America"

 

And don't forget all the money they get from the government entities to locate in the region. It is smart for the foreign companies to locate here for now. Take our money and leave when they need to. That is what US corporations do around the world. It still does not excuse them.

As far as productivity could it be because we work harder and longer than they do elsewhere in the world. Global economics has many factors. Certain Industries benefit from increased productivity. Certain do not. Why do you think furniture manufacturers are leaving and going to China. Is it do to productivity or is it labor cost? Why is China buying saw logs and lumber form the US at a greater pace. It is because the need for both of those products are needed in China to make a product and then ship back to the US.
Economically it should not be feasible to grow a tree here, ship it to China and have them manufacturer it into lumber and then make furniture out of it. They then ship it back and sell it to someone in North America. Where do the profits go? To the people who were highly productive, but not cheap enough. No a lot of it goes to the executive of the furniture company who thought it was great to move manufacturing to China. Instead of updating the technology in the US they take the shortest way to maximize profit while endangering the very country they need to sell their product. Their will be a down fall as it is inevitable.

This is but one industry that is guilty, but how many more are there. Do I expect the government to regulate? No, as it would hurt more than anything. Do I hope and pray the American public wakes up and demands different? Yes, maybe it will before it is too late!

 

10% profit is corporate greed?

I would like to hear from some of the business owners here and find out what their percentage is profit. I guarantee you it's quite a bit more than 10%.

But then, like I've explained, some would rather put blinders on and say "it doesn't matter, someone told me who to blame for my lotten life and it's BIG OIL!"

If gas prices are REALLY gonna hurt you THAT much, go sell that Expedition or Navigator your wives tailgate me with on a daily basis.

 

Agreed, I would have gotten my butt reamed a number of time, and did, in my past lives for only a 10% profit.

One of the organizations I am working at this week makes a 22% profit, but you don't hear a lot of whining because they are not a high profile organization.

 

I understand that 10% profit is not big percentage wise, but what about taking 5%, which would be what $20 billion, and investing it in pipeline repair or R&D to find alternatives to oil. I know they spend money on both of those things. Wonder if Exxon could spend %5 billion of their profits to retrofit their tankers so we reduce the risk of another Exxon Valdez accident.

Maybe Exxon should take some of their estimated $29 billion in cash to pay down off the $8 billion in debt they have. They do it because the executives are managing for immediate shareholder value not long term for Exxon or this country.

 

If I was a stock holder in Exxon and they were only making 5% I would probably get rid of their stock. Keep in mind what Clif is trying to say, Exxon is not one greedy person, Exxon is probably hundreds of thousands of investors who are trying to get a return on their investment. 5% is a pretty lousy return, I could pull my money out and put it to better use.

Regarding the investment in infrastructure, do you know they are not doing that? They have a responsibility to their shareholders and their stakeholders, you have to balance your funds appropriately.

 

The percentage of profit is different for high volume businesses.

http://www.aginfo.psu.edu/psa/ss96/aisles.html

Grocery chains have adopted aggressive strategies because their profit margins are thinner than a potato chip. "In general, a supermarket's profit is 1 percent of sales," Dunn says. "An old rule of thumb used to be that if you bought $25 worth of groceries, then tipped the bag boy a quarter, he made as much profit as the supermarket did."


http://findarticles.com/p/articles/mi_m5072/is_30_27/ai_n14888473

YEAR (Jan. 5) 2005 2004

Revenue (millions) $422.5 $359.9
Total Expenses (millions) 397.4 354.3
Operating Income (millions) 25.1 5.6
Net Income (millions) 17.7 5.6
Earnings Per Share $0.92 $0.42

 

Once again, I agree with Pirate. I wonder, too, how much the top brass got in bonuses, and what their salaries and benefit packages are?

Pat

 

So if I invest $1 in company X and get a 5% return on investments and invest $1 in company Y and get a 10% return I should pull my money out of company Y and invest in company X because they do twice as much business??? :?

 

Oh the executives make a pretty penny.

http://finance.yahoo.com/q/pr?s=XOM

http://abcnews.go.com/GMA/story?id=1841989