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Dr. Bob is Robert Hsiung, MD,
bob@dr-bob.orgShown: posts 1 to 8 of 8. This is the beginning of the thread.
Posted by AuntieMel on March 20, 2006, at 17:28:11
Company A has a balance sheet:
(A)Revenues......37,099.9
(B)Costs.........31,256.6
Income before tax(C).........5,943.2 (A - B)
Income tax...................2,330.2
Net Income...................3,613.0So, in effect, Company A gets to "keep" (meaning it's stockholders make) a little less than 10% of what it takes in.
Now - Company B:
(A)Revenues......23,104.0
(B)Costs.........17,019.0
Income before tax(C).........6,690.0 (A - B)
Income tax...................1,818.0
Net Income...................4,972.0So, company B gets to keep a little more than 20% of what it takes in.
But company A has had the best year in a long, long time. And company B has these results year after year.
Which one would you say has the better deal???
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Now - the units are wrong. On company A the numbers should have a zero added to the end. Which means it actually makes more money than company B. This is a matter of scale, though, because company A is actually that much bigger.
Company A gets hauled off to congress for it's obscene profits (ExxonMobile)
No one squawks about company B (Coca-cola)
Posted by special_k on March 21, 2006, at 3:18:30
In reply to Obscene profits????, posted by AuntieMel on March 20, 2006, at 17:28:11
Excuse my ignorance...
But how are profits related to share prices / payments?
(Really... I don't know anything about this...)
Are the profits distributed amongst shareholders or something?
Or is there a more indirect relation around profits and shareprices?
> Company A gets hauled off to congress for it's obscene profits (ExxonMobile)
> No one squawks about company B (Coca-cola)Hmm. No idea what the difference would be.
Was other 'relevant information' cited (as to the difference between the two cases)?
Did one maybe lay off a lot of staff?
Cut back on employees benefits or something like that?
Posted by Dinah on March 21, 2006, at 7:56:43
In reply to Re: Obscene profits???? » AuntieMel, posted by special_k on March 21, 2006, at 3:18:30
Profit is usually expressed and compared in the form of earnings per share, or as an earnings to equity ratio, or net profit as a percent of sales.
In company with greater sales, the profit percentage is usually lower. That's one reason Wal Marts can offer things at lower prices than mom and pop stores.
However, with Coca Cola and ExxonMobil, both companies are probably large enough that that shouldn't be a significant factor.
In other words, it's unfair to judge profit in terms of absolute dollars, because it ignores all other factors, such as total size of the company, total sales, the amount invested in the company and the subsequent return on equity, etc.
It's also unfair to judge solely in terms of net profit percentages. A small company with limited business needs vastly greater net profit percentage in order to produce an adequate return on investment or livelihood to their owners.
It would be nice to believe that the congressional committee took all those things into account before deciding to bring someone before them. And that anyone serving on a congressional committee has received the necessary training to do their specific assignments.
Posted by AuntieMel on March 21, 2006, at 8:54:44
In reply to Re: Obscene profits???? » special_k, posted by Dinah on March 21, 2006, at 7:56:43
Unfortunately, that just isn't the case with oil companies. People hear "36 billion profit" and go ballistic without considering the size of the company or it's percentage of profit compared to revenue.
The only reason for congressional hearings is that they are oil companies and the constituants don't like the price of gasoline. As in all past hearings of the sort, they will find that there was nothing illegal going on, but meantime they eased the folks back home.
It would be nice if senators - and the media - would actually come out and say that those are *not* unreasonable returns.
Most investors aren't even happy with a 10% rate of return. If I remember right, Exxon's stock went *down* because of those numbers.
Posted by special_k on March 21, 2006, at 21:51:38
In reply to Re: Obscene profits???? » Dinah, posted by AuntieMel on March 21, 2006, at 8:54:44
maybe it is something to do with...
people profiting so much from something that is so harmful to the environment.
that is something i personally struggle with...
Posted by AuntieMel on March 22, 2006, at 8:34:07
In reply to Re: Obscene profits????, posted by special_k on March 21, 2006, at 21:51:38
Many would say Coca-cola does us more harm than oil.
I saw on a show last night that in the 1850's sperm whale oil was $1.25 a gallon. What would that be adjusted for inflation??? Not to mention all the whales that were killed for it.
It was used for lighting in lighthouses - and for lighting the houses of rich people.
Posted by special_k on March 22, 2006, at 18:02:36
In reply to Re: Everything's relative » special_k, posted by AuntieMel on March 22, 2006, at 8:34:07
> Many would say Coca-cola does us more harm than oil.
maybe...
many would say a butterfly flapping its wings in some corner of the south pacific does more harm than anything human beings have managed to do...
yeah the world is one f*cked up place.
coca cola probably has a lot to answer for re peoples health. did you know it used to contain cocaine? back when that was legal. they moved to caffine.
i think it might be more about just how bad we are finding use of fossil fuels to be re the environemnt. and then the wars that are fought etc.
:-(
Posted by AuntieMel on March 23, 2006, at 13:55:45
In reply to Re: Everything's relative, posted by special_k on March 22, 2006, at 18:02:36
Yea, I knew about the cocaine. Too bad it became illegal.
Well, for sure we could do a better job of scrubbing the output of refineries and plastics plants.
And it would be (don't tell my bosses I'm saying this) absolutely *wonderful* if we could find some reasonable alternatives. Or at least do a better job of finding those fossil fuels at home so we don't ever have to feel like we're pressured into making deals with the devil.
Over here they're pushing towards E85 - part ethanol from corn. It does burn cleaner in cars I hear. But - I also hear that it takes more energy to make it than it saves. Add to that the cost of subsidizing the industry......
I'm optimistic we will find better alternatives. It's too expensive not to. If *we* don't come up with the alternatives, someone else will.
I like the diesel they are making out of used restaraunt oil. And I loved the idea of burning garbage - it takes care to two birdies with one stone.
Time to put those inventive American minds to work...
But that's off the original point - the percent rate of return in the oil biz really isn't that high. And it doesn't even take into account capital expenses, which how most of the exploration dollars get counted.
This is the end of the thread.
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