Democrat Attack Math
I just looked up a couple of things. It confims what I have beenthinking about the Democratic party's concerted attack on Wal mart.
It is crap. And they know it. Or they are too stupid to do elementary math.
The much touted figure: Wal-Mart made 11 billion in profit last year! Gads! They are raping and pillaging America blind!
From the New York Times:
Democrats say Wal-Mart is a potent symbol of corporate excess. The company earned $11 billion in profit last year, but fewer than half of its employees in the United States are covered by its health care plan, and the average worker earns less than $20,000 a year.
From the Wal-Mart public report:
“ When it comes to our performance
during fiscal 2006, we have a lot to be
proud of at Wal-Mart. Our net sales
rose 9.5% to a record $312.4 billion.
Net income rose 9.4% to a record
$11.2 billion. Our earnings per share
grew double-digits from $2.41 to
$2.68 per share.”
Got that? $312 billion in sales generate $11 billion in profit. 3.6% profit. Yep. That is some serious raping and pillaging. Not much better than you would get in a bank savings account right now.
That is Democrat attack math.
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Blue Crab Boulevard » Blog Archive » The Democrat’s Wal-Mart Jihad — Friday, 25 August , 2006 @ 9:56 pm
By tom scott, Friday, 18 August , 2006 @ 12:31 am
I’ve been rounding up some articles to rebut Washington Senator Maria Cantwell’s claims of gas gouging. I noticed Wal-marts percent of profit of their revenues. Here is the page to view some of the companies. Take a look at Microsoft and Citigroup.
This is an interesting post. Also about gas taxes and who the real gougers are.
By The Truth, Friday, 18 August , 2006 @ 10:43 am
Percent profit on revenues is not at all analogous to return on a savings account–it’s more analogous to how much you’re able to save each year as a percentage of your income.
More analogous to the savings account is return on assets, which for Wal-Mart was 8.9% in FY 2006, 9.3% in FY 2005, and 9.2% for FY 2004.
I don’t know enough about their industry to know whether this is spectacular, but it does seem pretty good.
Retail businesses typically have low rates of return as a percentage of revenue because their inventory turnover tends to be high.
Here’s a little example. If I invest $100 in inventory, sell it for $110, and turn it over 5 times, I’ve made $50 on a $100 investment (50% ROI), but only a 9.1% return on revenue ($50 on $500).
If, on the other hand, I invest $250 in inventory, sell it for $300, but only turn it over twice, I’ve made $100 on a $250 investment (40% ROI) even though my return on revenue is an impressive 16.7%.
The first example actually is a better financial performance, even though the second has a better return as a percentage of revenues.
It’s an old PR trick of retail businesses in labor negotiations to make it look like they’re barely squeaking by by using return on revenue. It’s also a trap that uninformed business people sometimes fall into.