<p>Sure, it is similar to individual income tax calculations, right?</p>
<p>But how can you equate, as you appear to be doing when you say “Gross Profit/Margin”, profits and profit margins?! They are not the same thing.</p>
<p>Last year Microsoft had EBIT of $13 Billion on sales of $41 Billion.(31.7% Margin!!!) If anyone is ripping us off it’s Microsoft more than Exxon.</p>
<p><a href=“This%20is%20twice%20in%20one%20thread%20that%20I’ve%20agreed%20with%20Barrons.%20%20I’m%20feeling%20woozy…”>i</a>* </p>
<p>No kidding. Microsoft is a bona fide, classic monopoly, and is getting away with highway robbery.</p>
<p>leanid, if you are for controls of profits to a “reasonable” level, can I assume that you also favor controling the profits that home owners can reap when they sell their homes? Why should someone who lived in a government subsidized house in, for example, California (interest and taxes having been deducted from income taxes) be able to become a millionaire by virtue of his house appreciating through the roof. (pardon the pun) </p>
<p>Why should a corporation which provides goods and services as well as jobs be singled out for limits on profits when a homeowner who provides none of these benefits and has been significantly subsidized by the government be immune from a windfall profit tax?</p>
<p>“Why should a corporation which provides goods and services as well as jobs be singled out for limits on profits when a homeowner who provides none of these benefits and has been significantly subsidized by the government be immune from a windfall profit tax?”</p>
<p>I agree!!! Tax ALL the millionaires, whether they made their money in subsidized government houses or in subsidized corporate socialist enterprises. Big taxes, whoppers!</p>
<p>I’m glad fundingfather and I have finally found something that the both of us can heartily embrace!</p>
<p>Leonid, what do you consider a “normal” and an “obscene” profit margin? Is a profit margin of less than 11% excessive? This is a snapshot of Exxon that shows the profitability as well as some information as to who are the primary beneficiaries of Exxon’s management effectiveness. Only 0.15% of the shares are held by insiders. It seems that Exxon does a lot of good for pensioners and instutional investors. </p>
<p>Revenue (ttm): 332.36B
Net Income Avl to Common (ttm): 36.13B </p>
<p>Profitability<br>
Profit Margin (ttm): 10.87%
Operating Margin (ttm): 15.99% </p>
<p>Management Effectiveness
Return on Assets (ttm): 18.81%
Return on Equity (ttm): 33.93% </p>
<p>Shares Outstanding: 6.11B
Float: 6.10B
**% Held by Insiders4: 0.15% **
% Held by Institutions4: 53.10% </p>
<p>PS I do not think that Exxon can be criticized for its management and financial performance. The company’s objective is to make money for its shareholders. On the other, the MANNER by which it gets there is a different story. The recently departed Lee Raymond may have been one of the most succesful industry stewards, but nonethless a truly despicable human being and an extremely poor world citizen. He left a lot more money in Exxon;s vault, but little of anything else.</p>
<p>barrons - You are saying that profit margins are determined by EBIT, not after taxes, correct? If that is ture and Microsoft is realizing over 30% margin, then isn’t 48% of that paid as income tax? Still, that leaves over 15% profit margin. I do not know what formula has been established (I think there is one) to determine what the margin should be for that industry (computers, etc), but I do know the rule is (or used to be) that businesses with high inventory turnover and relatively low prices (such as supermarkets), traditionally have very low margins, like 2 or 3%. Whereas, those with comparatively low turnover and high prices (such jewelry stores) have higher margins – maybe 30%.
It seems that Microsoft falls somewhere in between, ie - high turnover and high prices! In view of that, perhaps their margin (if it is 15%) is just about right…?</p>
<p>fundingfather - Windfall profits happen on occasion and the “homeowner” (at least the vast majority – I hope!) is not in the “business” of selling his own house. Thus, the profits derived there from are certainly more excusable than the excessive yearly profits that real businesses reap. Apples to oranges, maybe?</p>
<p>ok I admit I am math impaired- but from what I have read, compared to prices on everything else, gas is not that high.</p>
<p>SUre I remember when gas was $0.60 a gal, but I quit smoking when a pack of cigarettes was $0.65- otherthings admittedly haven’t gone up. I paid $40 for a haircut in 1980 and I pay $40 for a haircut in 2006</p>
<p>I think gas tax should be higher- not for profit margins but to pay for alternate forms of transportation/repair
I don’t think anyone has really changed their driving habits,even with increases- make it $5 a gallon!</p>
<p>xiggi - What is a fair profit margin? See my response to barrons. From that I would guess that Exxon’s IS excessive.</p>
<p>kity - You paid forty dollars for a haircut in 1980?!!! No wonder prices haven’t gone up!</p>
<p>( well I didn’t exactly pay $40 for a haircut in 1980- but that is what I charged 
)
But really- that is only $40 an hour and out of that have to pay chair rental fees to business etc. On the other hand I see that a nurse practioner that I took my daughter to, who met with us and decided that she didn’t want to take a soon to be 16 yr old on( even though the reason why we even made the appt is that she said she cared for adolescents) , and spent the 40 min that was alloted for the appt giving us names of therapists that she knew, but that didn’t take our ins charged us $175.</p>
<p>FOr your $40 you got a really good shampooo, with a neck rub, brillant haircut and blowdry and I gave you advice on how to break up with your boyfriend. Plus if you were there on Fridays, you could have strawberries and champagne!</p>
<p>I used to get a good shampoo, haircut and advice from a very attractive female at a place named “Ivan” on Jermyn Street in London in the 1970’s. Didn’t offer the neck rub or strawberries and champagne but the setting could not be beat! Think I paid six pounds. Wonder if it is still around?</p>
<p>You know who’s to blame for high oil and gas prices? People buying them. Supply and demand, guys.</p>
<p>Taxes can vary so much due to credits, offshore activity etc. nobody looks at after tax profit. It’s all about EBIT. But Microsoft did not pay anywhere near 48% in tax.
But I made a mistake–the $13 Billion is after tax. EBIT was $18 Billion</p>
<p>UCLAri - You are absolutely right (and we thought everything was relative)! the ultimate power lies with the people. Comforting isn’t it…somehow…</p>
<p>barrons - Why DOESN’T anyone look at “after tax profit”? It would still indicate whether the margin is acceptable. So, Microsoft paid $5 billion in tax. That is less than 33%. What’s the explanation?</p>
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<p>People need to realize that scarcity, and supply, are very very powerful factors.</p>
<p>How many of us are paying $1 for a pint of water at a convenience store?</p>
<p>I admit it, I do. Great, that’s $16 a gallon!</p>
<p>What is the profit margin on bottled water?</p>
<p>How about a pint of beer at a beer pub that brews its own beer - that’s about $3.50/4.50 pint? How much does that cost to produce. I have been told it’s less than .25 per pint. How’s that for a profit margin? (I know I am leaving out all the other costs.)</p>
<p>It really is supply and demand.</p>
<p>UCLAri - Right. Hmm…how scarce is computer software (speaking of Microsoft). That is precisely why a monopoly, in effect, is so abhorrent – because the monopoly holder can charge the price of rarity for something common.</p>