Tuesday Morning Roundup

Must See Tuesday Video! (4.00 / 1)

This video made my day!  It is raw uneditied video of a "Factor" producer confronting the wrong person! I hope it does for you what it did for me! 

 Be sure and stay tuned to hear what Bill O'Rielly has to say.

Pssst!  It's the stupid media!

The work goes on, the cause endures, the hope still lives and the dreams shall never die.~Senator Edward M. Kennedy (D. MA)

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by: Redeye @ Tue Apr 08, 2008 at 15:47:56 PM CDT

Ever heard of profit margin? (0.00 / 0)

"$1300 per second, 24/7/365"

I'm just curious, do you know what ExxonMobil's profit margin was last year? Do you know how it compares with other companies? Do you understand the significance of profit margin?

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by: Brian @ Tue Apr 08, 2008 at 22:41:21 PM CDT

Huh? (0.00 / 0)

What difference does it make what Exxon Mobiles profit margin was last year? 

Who cares how Exxon Mobiles profits compare "to other companies"?

What exactly is the "significance of profit margin"?

Are you defending Exxon Mobiles $1300 per SECOND profits?

 

 

The work goes on, the cause endures, the hope still lives and the dreams shall never die.~Senator Edward M. Kennedy (D. MA)

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by: Redeye @ Wed Apr 09, 2008 at 09:41:36 AM CDT

[ Parent ]

A mind is a terrible thing to waste (0.00 / 0)

That is what I figured: absolute economic and business ignorance.

Here's a primer. Profit margin is the money you are allowed to keep (income) divided by the total amount made (revenue). ExxonMobil had a net income of $40.6 billion in 2007, which is $1,300 per second. That's a lot of money. Their total revenue (all the money they took in) was a whopping $404.5 billion, though (nearly $13,000 per second). However, they incurred costs (for things like materials, exploration, compensation, etc.) of $334.1 billion. They also paid $29.9 billion in taxes (42.4% of their income before tax and nearly $1,000 per second). Their resulting profit margin for 2007 was 10%.

To put profit margin another way lets say a rich guy named Tom invests $300,000 in the stock market. A relatively poor gal named Beth invests $5,000 to purchase art work. After a year they both decide to sell. Tom gets $325,000 for his stocks and Beth gets $15,000 for her art. Who will be happier? Tom's income (revenue minus expenses) was $15k more than Beth's, but he also put a lot more of his money at risk in order to earn a profit margin (excluding any taxes) of only 8%. Beth's $10k profit, while being much less than Tom's, resulted in an amazing profit margin of 67%. Tom's profit in terms of actual dollars is greater than Beth's, but I challenge you to find anybody (well, anybody with a lick of sense) who would choose an 8% profit margin over a 67% profit margin.

ExxonMobil made what seems like obscene profits simply because they are a large company with both substantial revenues and costs. Their size results in an economy of scale that, despite what you might think, keeps prices as low as possible.

Here are the profit margins of some other companies that I calculated a while back (I think this is for the third quarter of 2006):

• 65% (20% w/o one time income source) - Texas Instruments
• 29% - Google 29% - Coach (high end purse maker)
• 28% - Coca-Cola
• 24% - Microsoft
• 24% - Genentech (makers of Avastin and other prescription drugs)
• 20% - Bank of America
• 13% - Disney
• 10% - Exxon Mobil (evil oil company)

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by: Brian @ Wed Apr 09, 2008 at 12:30:51 PM CDT

[ Parent ]

And your point is? (0.00 / 0)

 ExxonMobil had a net income of $40.6 billion in 2007,

 

A mind is a terrible thing to waste and a hard thing to change.

The work goes on, the cause endures, the hope still lives and the dreams shall never die.~Senator Edward M. Kennedy (D. MA)

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by: Redeye @ Wed Apr 09, 2008 at 12:37:55 PM CDT

[ Parent ]

I'm sorry you're not able to understand (0.00 / 0)

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by: Brian @ Thu Apr 10, 2008 at 05:34:32 AM CDT

[ Parent ]

I'm sorry too. (0.00 / 0)

I may not understand what your point is, but there is a flaw in your premise. 

You said:

A relatively poor gal named Beth invests $5,000 to purchase art work.

 

FYI, relatively poor gals don't have $5,000 to "invest in art work".  They are to busy trying to have access to quality health care, or feed their families, or save their homes from forclosure, or trying to make ends meet, or trying to buy gasoline for their autobmobile is they are lucky enough to have one.

Also FYI, you aren't going to find any sympathy for big oil companies on Left in Alabama.  We care more about the welfare of "we the people" than  corporations.

We don't resort to insults or personal attacks when we respond to each other.

A mind is a terrible thing to waste (0.00 / 0)

That is what I figured: absolute economic and business ignorance.

 

We know how to play well with others in this sandbox.

The work goes on, the cause endures, the hope still lives and the dreams shall never die.~Senator Edward M. Kennedy (D. MA)

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by: Redeye @ Thu Apr 10, 2008 at 11:30:06 AM CDT

[ Parent ]

Consult a dictionary (0.00 / 0)

Obviously you don't know the definition of "relatively" either. In the example I gave Beth is poor RELATIVE to Tom. I did not imply that she was impoverished or that her income or wealth fell below some quantifiable level.

Do you loathe ExxonMobil because they are big, because they are an oil company, or all of the above? What about the "we the people" who work for ExxonMobil or are shareholders? If you think only rich fat cats own ExxonMobil stock then you are sadly mistaken. It is one of the most widely held stocks among 401k funds that most ordinary Americans use for their retirement savings.

Keep typing, though. The more you write, the more you make my point.

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by: Brian @ Thu Apr 10, 2008 at 17:35:19 PM CDT

[ Parent ]

Brian, income divided by revenue = 1 (0.00 / 0)

Here's a primer. Profit margin is the money you are allowed to keep (income) divided by the total amount made (revenue).  Brian

Income = revenue, net income(before tax) = income(revenue) minus expenses. Profit(After tax) = net income minus taxes. Profit (after tax) divided by revenue = Profit Margin.

profit margin is an internal report that is good when used to compare companies in the same field, you can get an idea who best controls cost. Comparing Profit margin between Exxon, and the stockholder and the art lover is meaningless.

Brian perhaps in your next primer you can explain ROI, ROA, and ROE to us uneducated( I did get an A in PE) folk.   

 

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by: Go Blue @ Fri Apr 11, 2008 at 09:47:50 AM CDT

Speaking to the level of the audience (0.00 / 0)

Go Blue - I was INTENTIONALLY being imprecise due to the obvious ignorance of my specific audience in that instance.  As I'm sure you know, however, the word "income" without any additional descriptors can be used "as shorthand for net income."  I was painfully aware that if I started throwing out terms like "gross" and net" that the individual the comment was intended for would be hopelessly lost.

Comparing profit margins across industries, while not meaningless, is certainly not ideal.  On that I think we agree.  However, profit margin, in addition to measuring cost controls, is also an indicator of ability to control pricing.  A company that can charge a premium for its product over competitors (due to superior quality, marketing, or whatever) will generally recognize a higher profit margin (provided they don't get out of control with their costs of course).  I say this (and it was the underlying reason I brought this up) because some people have a false belief that companies like ExxonMobil are taking advantage of regular people by immorally pricing their product at an excessive level.  That is clearly not the case with ExxonMobil, despite whatever their actual profit in dollars might be, because of their modest profit margin.

Believe me, if they could charge more and increase their profit margin they would.  But they can't because the market works.

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by: Brian @ Fri Apr 11, 2008 at 22:30:16 PM CDT

[ Parent ]

Brian, (0.00 / 0)

You are an apologist for Exxon/Mobile on a progressive blog and you call this audience and this "individual" ignorant and hopelessly lost? LOL! We don't resort to personal attacks, name calling and insults when the substance of our arguments fail on this blog. We know how to play well with others in this sandbox. This will be my final response to you on this subject. Peace.

The work goes on, the cause endures, the hope still lives and the dreams shall never die.~Senator Edward M. Kennedy (D. MA)

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by: Redeye @ Sat Apr 12, 2008 at 10:01:18 AM CDT

[ Parent ]