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to the table on another board I read (corner-carvers.com). Here is a post from there that explains how the gas companies are making record profits. "Let's build a business on three basic assumptions:
1) I buy a product for 1 dollar per unit.
2) I then perform 10 cents of work per unit on said product. 3) I do this with capital provided by investors who will put their money somewhere else if I don't provide a return in line with other investments available to them, meaning I have no capital at all and can't sell product if I don't meet the market demand placed upon my business by the investment community. Let's say that expected return is 10%, and we'll simplify the economy so that the return to investors comes directly from the profit I earn on my product sales and my product distribution costs and overhead are captured in the 10 cents of work perfomed on the product. Now, let's put some numbers to that business: Q) How much must I charge consumers for this product in order to create the profit required to satisfy my investors? A) $1.21 per unit. ((1 + .1)*1.10) Q) If I sell 100,000 units, what is my net profit? A) $11,000. (.11 * 100,000)
Now, for the fun part, where you get to participate:
Q) What happens then my cost per unit goes to two dollars? Do the math and let me know what my net profit is going to be in dollars, assuming all other factors remain the same including investors expecting a return on their capital comparable to other potential investments the marketplace has to offer. Unit cost Work Cost Net Cost Investor Demand Profit per unit Unit sales Net Profit
1.00 0.10 1.10 10% $0.11 100,000 $11,000
1.05 0.10 1.15 10% $0.12 100,000 $11,500
1.10 0.10 1.20 10% $0.12 100,000 $12,000
1.15 0.10 1.25 10% $0.13 100,000 $12,500
1.20 0.10 1.30 10% $0.13 100,000 $13,000
1.25 0.10 1.35 10% $0.14 100,000 $13,500
1.30 0.10 1.40 10% $0.14 100,000 $14,000
1.35 0.10 1.45 10% $0.15 100,000 $14,500
1.40 0.10 1.50 10% $0.15 100,000 $15,000
1.45 0.10 1.55 10% $0.16 100,000 $15,500
1.50 0.10 1.60 10% $0.16 100,000 $16,000
1.55 0.10 1.65 10% $0.17 100,000 $16,500
1.60 0.10 1.70 10% $0.17 100,000 $17,000
1.65 0.10 1.75 10% $0.18 100,000 $17,500
1.70 0.10 1.80 10% $0.18 100,000 $18,000
1.75 0.10 1.85 10% $0.19 100,000 $18,500
1.80 0.10 1.90 10% $0.19 100,000 $19,000
1.85 0.10 1.95 10% $0.20 100,000 $19,500
1.90 0.10 2.00 10% $0.20 100,000 $20,000
1.95 0.10 2.05 10% $0.21 100,000 $20,500
2.00 0.10 2.10 10% $0.21 100,000 $21,000
Where is the problem here again? I'm missing it. Barring a decrease in the expectations of investors with regard to return, which isn't likely given the strength of the remainder of our economy, I don't see how you can contunue to meet investor expectations in a market that has seen a steady and significant increase in raw materials costs over an extended period of time without having record profits every year. Do you?"
Rule #1 - There's always a bastard! 
JRH(KY): for some reason, when I hear the word 'tranny' I think of transvestite before I do transmission. don't ask me why
boileralum: FAGMO!
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Bill (ImTheDevil): blah blah blah
me: Just because you are covered in gasoline right now, doesn't mean you are right!
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JRH (KY): I'm also using up a weekend this month for Indy and a weekend next month for the USGP. Throw in our trip to PA and GF is getting tired of my car habit. Boy I'm going to miss her :-D |
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