Insanity: 1 out of every 3 dollars spent on a Microsoft product is profit.

1 out of every five dollars spent on a drug from Merck is profit.

So that means, any Merck drug could in fact drop 20% in price, and not effect the workers or researchers, or even the executives their salaries. And that's an average too, so that means that they could have a higher profit margin on some drugs and a low margin on others. Absolutely, fucking insane!

Ironically, the big oil companies make far less in profit margins than this! :rofl:

http://www.merck.com/finance/annualreport/ar2005/pdf/Merck_2005_Selected_Financial_Data.pdf

Look under "Financial Ratios"

"Financial Ratios:
Income from continuing operations as a % of sales 21.0% 25.3% 29.3% 31.7% 33.3% 33.0%
Net income as a % of average total assets 10.6% 14.0% 14.9% 15.5% 17.3% 17.9%"

What's fucked up is that in 2003, 2002, 2001, and 2000 almost 1 out of every 3 dollars spent on a medicine on average went to the investors as profit.

X = total profit over time interval t.
Y = money paid out to investors over time interval t. This would be money paid as repayment of bond debt, par value of common stock, dividends paid on common and preferred stock, etc.


The ratio of Y:X tells you how much profit of the profit was given to investors over the given time interval. Assuming that the company in question is publicly traded, then X and Y are public data and provided every three months.

So if there is 100 million in profit for a given calendar year. The company paid out 25 million to investors. The ratio is 25:100, which can be reduced to 1:4.

and so that does change the average profit actual realized by investors in 2005 to:
15.19% profit so it's fewer dollars of actual dividends, but as for net profit per share, that data is the same.

We have very efficient financial markets that even out returns to investors over time. Investors get returns because the are "lending" their money to microsoft to develop products. A shocking proportion of those investors are regular people -- state and municipal pension funds, 401Ks -- and philanthropies, foundations and universities. 1/3 is a high rate of return, but Microsoft is not a physical capital heavy organization.

The problem in the corporate sector is executive salaries. That market is not efficient, and in fact is completely broken. Executives basically choose their own salaries through compliant compensation committees -- a form of executive looting, which the shareholders (the ones getting a return on investment) are incapable of stopping.

The amount of revenue going to executive salaries is obscene and irrational.

I think big pharma is out of control too, but not for this reason at all. This is why people invest in a company in the first place.

Just racking up hordes of cash to crush competitors

not as a high as the net income, but very fucking high!

actually, Microsoft's dividend was much lower at $ 0.35 a share. So it was a might lower than their net income.

I think about this a lot. Certainly, one of the problems is that we have either built-UP over time or have a built-IN insensitivity to others who we do not know personally. I mean, why on earth couldn't we share the wealth to be sure that everyone's basic needs are met? We could worry about profits after that. Is that so unreasonable? Couldn't corporate execs. live in a $3 Million home instead of a $30? I think the problem lies in recognizing and overcoming human nature.

I fully appreciate the notion that a corporate "person" should be a responsible member of society and pay taxes, etc.

But I don't understand the rationale for why a part-owner should get zero return in a for-profit business. I understand that somethings maybe should be state/government owned and not-for-profit (public education, public medical care, highway systems, water works, etc.)

But investors gain part ownership because the corporation wants to borrow their money. The only thing the corporation has to offer for the rent of the money, is a piece of the earnings.

Do you want corporations to be banned from this method of raising capital?

we democrats do not need money. we can live of the pureness of our souls.

They would probably lose capital very quickly to companies that are giving investors a return on their investment. Or should people invest in companies without any expected return on their investment?

Don't try to introduce common sense into a perfectly good rant against the man.