How much is a fair profit?

Lots of talk in the media about Exxon’s earnings for the most recent quarter.  The New York Times even pointed how how much money Exxon made per minute.  Some politicians are even talking about a windfall profits tax.  All this begs the question:  How much is a fair profit?

If you want to have some interesting discussion you could begin with a little matching quiz that I put together below.  Scroll on down for the answers.

Match the company with its recently announced quarterly profit:

Amazon             3.2%
Exxon                3.9%
Microsoft           8.45%
Wal-Mart           30.5%

Sources:
Amazon – http://www.reuters.com/article/businessNews/idUSN2344993420080724
Exxon – http://www.nytimes.com/2008/08/01/business/01oil.html
Microsoft – http://www.microsoft.com/presspass/press/2008/apr08/04-24fy08Q3earnings.mspx
Wal-Mart – http://www.businessweek.com/bwdaily/dnflash/content/may2008/db20080513_718248.htm

ANSWERS:
Amazon           3.9%    (Revenue $4.06 billion;  earnings $158 million)
Exxon              8.45%     (Revenue $138.1 billion; earnings $11.68 billion)
Microsoft        30.5%   (Revenue $14.45 billion; earnings $4.41)
Wal-Mart          3.2%     ( Revenue $94.1 billion; earnings 3.02 billion)

One response to “How much is a fair profit?

  1. A Windfall Profits Tax impacts more than the oil companies.

    There are hundreds of thousands of people who are royalty owners. The average well in the USA produces something like 10 barrels per day. Under a Windfall Profits Tax scheme, these royalty owners will see their monthly royalty checks reduced 50% or more.

    Additionally, the Oil Producing States impose a production tax on the oil produced in their state. Under a Windfall Profits Tax scheme, these states will see a reduction in their production tax income of 50% or more.

    Those of us who oppose Obama and his Windfall Profits Tax scheme need to mobilize the hundreds of thousands of royalty owners and the tens of millions of people who live in the oil producing states.

    These people need to understand that in no uncertain terms a Windfall Profits Tax will be a big hurt upon their income.

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