What does it actually mean when they say "record profits?"
What does it actually mean when they say "record profits?"
Obviously people are being price gouged, but just saying "record profits" without really being able to explain it feels like I'm just repeating what I've heard people say and not speaking on an informed level. What does it actually mean? Like before or after production and transportation costs? Before or after taxes? Raw product yeild? Something else?
Profit refers to the money you have left over after you pay all of your operating expenses. These expenses would include employee salaries, inventory cost, rent, transportation, everything it takes to run your business.
So, record profit would mean that the company in question made more money than they ever had before.
Which means it doesn't hurt to look at executive pay on top of historical profits, as those are counted as operating costs as well.
IIRC the ratio between highest and lowest earners within a company has skyrocketed from about 25:1 to over 3000:1 in the past 75 years or so...
Even that's subject to a little fuckery, though. In absolute terms? Relative to valuation? Relative to the wider market? I imagine an actual analyst would be looking at the calculation used.
Profit is the Revenue(all of the money that you get from selling the products) - all of the costs; so that includes, manufacturing costs, Labour costs, overheads, tax costs, marketing, transport/distribution, insurance, rent, etc.
Companies can increase their profits in a number of ways, but in simple terms they can either reduce their outgoing costs or increase their incoming revenue. Most of the time they try to do both. So they might be putting fewer of their products in each box but charging more for them, or reducing the quality of their packaging but charging more for the products, laying off employees but charging more, or dodging taxes but charging more etc. etc.