Big Oil closed out the week with a bang, announcing profits of $72 billion dollars. To most people; that is a huge number, and indeed it is. But how many people who looked at the number realizes what it means?
The revenue of the three biggest oil companies were $772 billion, so the profit is really about 9% of revenue. In 2005 (last year numbers were available as of posting) Walmart had revenue of $312 billion and $17 billion in profits. Combined, the Fortune 500 companies had $9.1 trillion in revenue with $610 billion in profits, which is 6.7% of revenue on average. As you can see, the profit margin is not out of line for a big company especially considering that they all have shareholders to answer to.
The record earnings, of course, make for good fodder for politicians eager to play the class warfare card. Consider Hillary Clinton’s comments to the DNC after the profits were announced:
As a business owner, it frightens me anytime a politician is eager to take something from a company just because they can or they want to. Whether or not it really happens is irrelevant; the company puts forth the effort, the risk and earns the reward. It’s easy to take something from someone, it’s harder to go and earn it yourself.
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