I'm a big fan of putting things in context so as to keep them in perspective. The news media, of course, prefers to keep things more dramatic. For instance, they are blaring the news that Exon Mobil made a record profit of $10 Billion in the first quarter of this year. That provides an un-named politician with fodder about "taking on the greedy oil companies."
But Exon Mobil also had record sales in the first quarter, so I would rather hope that they made record profits. When you are operating a business and have stockholders, profit is a good thing. Excess profit might not be good for society, but merely knowing the amount of an oil company's profit does not really tell us much about that company's way of doing business.
In fact, Exon Mobil's net profit after taxes of $10.3 Billion represents just 9.3% of its sales, which does not strike me as an outrageous profit margin at all. Nor does it seem that the company is very successful at dodging the tax man, since it paid 46% of its income in income taxes.
Exon Mobil also has a huge investment in equipment and real property to provide that income, and it turns out that the supposedly usurious profit is reaping them a whopping 8.0% annualized return on that investment; nice, but hardly outrageous.
So, what exactly is all of the uproar about?
Just goes to show you what staistics can do.. and not do in the hands of a uneducated - oops... unscrupulous - oops again... well, okay, a politician. Like the proverbial bunch of blind men feeling up an elephant, no one thing is the whole story.ReplyDelete
I always suspected that "record profits" were a small part of "record revenues" (which was conveniently not mentioned) and more so what small percentage of revenues the profits actually were.
Of course that does not fit in well with political sound bites and machinations against opponents and obfustications of reality and common sense. But what else do we expect of politicians? I personally would like to see some honesty. A smart person would know it anyway, and I suspect many not-so-smart ones do to, that just don;t want to admit it. And if a politicain feeds their ignorance, hey, why not go along?
More's the shame.. and the country slides ever downhill.