And the profits roll......

before you do it you shout "Golf rules!" and then you win the stockmarket and it scrolls the credits. lawl.

 

No, no, that's different! Return on investment is not the same as profit margin, you know that! I know, you're off the clock. :mrgreen:

 

Since ROI is different from profit this is a function of the company and how it gives dividends. As for which would be the better investment I do not know, because the profit will be the same in both cases if the number of shares and all other aspects were the same. However, if one were 5+% with twice as much business it would be the better deal.

$1.00 in sales @10% profit = $0.10

$2.00 in sales @ 5% profit = $0.10

$2.00 in sales @5.1% profit = $0.102

 

Or I could pull my funds from the company making 5% profit and put it in the other company making 10% and have $0.20

 

See the return on shareholder value is key. 53% of their shares are held by Institutional and Mutual Funds. You are right in the respect that 5% margins would make the majority "shareholders" unhappy because then they could not justify their extravagant bonuses.

Where does the buck stop? Certainly Exxon invests in infrastructure and R&D for future energy supplies and better utilization of current ones. They still made close to $40 billion in profit and have $29 billion in cash. Can they not reinvest a little more to make the world better and find new energy sources.

The oil industry is just one example of what is wrong with the Wall Street mentality. What moral responsibilities do we reasonably expect to hold Corporations too?

 

Or pull the funds from the company making 10% and put it into the company making 5% and still have $0.20 .......

 

but if either company made the extra 0.1% you would make more with it ...

 

To be sure these examples are of the profit on sales not return, which is the basis for the investment pattern.

http://en.wikipedia.org/wiki/Return_on_investment

 

I don't necessarily agree with it but it a truly capitalist society the only responsibility they should have is to their shareholders. As a responsibility to their shareholders they have to balance risk which can take many forms:

• Insufficient return to their shareholders
• Legal and regulatory actions
• Public relations issues that endanger their position

I am sure there are many more, but those came off the top of my head.

 

Say what???

 

OK, let's try again on the difference between ROI (return on investment) and profit margin. Let's say you decide to go into business. Let's say you buy a building and machinery to make whatever it is you want to sell. Then of course you need start-up capital to buy raw materials and pay initial wages. So you start producing and selling your product. Then you use the proceeds from the sales of your product to buy more raw materials, pay salaries, utility bills, etc. At the end of the year, you look at the difference between what you took in and what you spent, and that is your profit (hopefully you have not suffered a loss, we'll just assume a profit). Your profit margin describes the profit as a percentage of the money you took in. Your return on investment describes the profit as a percentage of your investment in the business - what you paid for the building and machinery, etc.

With corporations like Exxon, the profit margin still describes the profit as a percentage of total revenues, and the return on investment describes the profit as a percentage of the value of the stock. Your personal return on investment may be more or less, depending on the price of the stock at the time you bought it.

 

Say what again???

I think I will stick with Merrill Lynch for investment advise.

 

Now that last statement makes sense, as a mutual fund investor I could care less about the rest of that, all I want is more money in return for each dollar I put out there. If I can earn more money by investing in Microsoft then Exxon I would put my money there.

Personally I don't have time to mess with that stuff, I have more important things to do, like screw around on 4042. I pay someone else to manage my investments.

 

This my friend is where leadership comes in. In a truly capitalist society their would be no government. One flaw of capitalism is the benefit for the greater good. We have deemed that cartel's and monopolies are not wise based on government interaction, which means we are not truly a capitalist society. True leadership by government leaders and business leaders are needed to return this country to strength and stability.

We must look past the short term shareholder value and find ways to innovate and lead. People used to look to the US to answer the problems of the world. Their was money to be gained from that, but we have lost our edge. We must demand better from all facets of our society or else history will tag us "The Generation of Me", which allowed the United States to fall to irrelevance in the world view.

 

I Agree! 8)

 

and to think Jefferson had the answers already.

translation of amor patriae is love of country or patriotism

 

The same amount of profit is made by either company, so if all things are equal (cost per share/dividend per share in relation to profitability) you will make the same amount of profit in either case.

You seem to be looking at the cost per share v return which seems similar but is different. The profit is a set amount after expenses are deducted from revenues. The percentage profit is that set amount compared to the total revenues. For high volume businesses the percentage will be lower as in the example of supermarkets in the case of high dollar products such as commerical aircraft or ships the profit margin is much higer per unit because there are fewer units that can be sold and the critical percentage is higher. Any business who is taking in profits over their critical percentage (the breakeven point) can be a good investment because of the cost of the investment compared to the return paid, which is called the ROI. Profit and ROI are connected only to the extent that profit is required for a positive ROI.

 

Sorry, I did not see you had already replied to this point.

 

I can agree with this with one small exception, the detriment fo cartels and monopolies was not due to the interaction with government. It was the actions of government that broke them up, but it was the effect on the society that was the reason they were seen as a problem. There would be a government in a purely capitalistic society just because an arbitrator would be needed for contract disputes. :lol: :lol:

 

I still think make as much as you can when you can. Lets look at Ford / GM/ company X. A few years back they were making lets say $1 billion profit per year. Lets say they make that for 10 years in a row. Thats 10 Billion. Now lets say for 2 years they lose 5 billion. That whole 10 years of profits is gone in a 2 years. If the Gov't would have taken 5 billion of that 10 billion because that was too much profit, well then Ford/GM instead of laying off 100,000 workers and giving them a $100,000 severance pkg, would have gone bankrupt and layed off everyone with no severance.

Sometimes a company needs to put that profit asside for future losses.