I am not saying that I believe Exxon is cooking the books. There is a big difference between using and abusing a system of highly technical rules and outright lying and fraud. I know with certainty that they are doing the former, but have no insight whatsoever as to the latter.
I think what causes some confusion is the terminology…
Revenues:
*The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the “top line” or “gross income” figure from which costs are subtracted to determine net income.
Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold.
Revenue is the amount of money that is brought into a company by its business activities. In the case of government, revenue is the money received from taxation, fees, fines, inter-governmental grants or transfers, securities sales, mineral rights and resource rights, as well as any sales that are made. *
**Profit: **
*A financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs and taxes needed to sustain the activity. Any profit that is gained goes to the business’s owners, who may or may not decide to spend it on the business.
Calculated as: Total revenue - Total Expenses = Profit
Profit is the money a business makes after accounting for all the expenses. Regardless of whether the business is a couple of kids running a lemonade stand or a publicly traded multinational company, consistently earning profit is every company’s goal. *
**Gross Income:
** *1. An individual’s total personal income before taking taxes or deductions into account.
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A company’s revenue minus cost of goods sold. Also called “gross margin” and “gross profit”.
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Your gross income is how much you make before taxes. It is the figure people are looking for when they ask how much you gross a month.
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This is an important number when analyzing a company, it indicates how efficiently management uses labor and supplies in the production process. Keep in mind that gross income varies significantly from industry to industry. *
Net Income:
*1. A company’s total earnings (or profit). Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses. This number is found on a company’s income statement and is an important measure of how profitable the company is over a period of time. The measure is also used to calculate earnings per share.
Often referred to as “the bottom line” since net income is listed at the bottom of the income statement.
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An individual’s income after deductions, credits and taxes are factored into gross income. Deductions and credits are subtracted from gross income to arrive at taxable income, which is used to calculate income tax. Net income is income tax subtracted from taxable income.
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Net income is calculated by starting with a company’s total revenue. From this, the cost of sales, along with any other expenses that the company incurred during the period, is removed to reach earnings before tax. Tax is deducted from this amount to reach the net income number. Net income, like other accounting measures, is susceptible to manipulation through such things as aggressive revenue recognition or by hiding expenses. When basing an investment decision on net income numbers, it is important to review the quality of the numbers that were used to arrive at this value.
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For example, suppose that your gross income is $50,000 and you have $20,000 in deductions and credits. This leaves you with a taxable income of $30,000. Then, suppose that another $5,000 of income tax is subtracted; the remaining $25,000 will be your net income. *
Everything here is from Investopedia.
Now, using these definitions and Exxon’s own filing, we can determine that indeed, for the last three months, Exxon took, after all expenses, taxes and costs, 11 billion dollars in cash from the market. Since we’re in the midst of the 2nd quarter, that means that Exxon took $22 billion from the market in cash. No fault to them for making the money. They’re entitled to as long as it’s legal to do so. I would argue though that absolute dollars, while they may not matter to the market, matter a great deal to the average person who buys the product.
First; Percentages are a nifty way to obfuscate the facts. They don’t lie, per se, but they lack the entire story. The fact is, $11 billion is a LOT of money. When you cloak that into percentages, it’s not so much. Per capita, it’s about $35 for every man, woman and child in America (assuming 350million people). That said, Exxon experienced a 17% jump over 2Q 07. People who aren’t ‘in the know’ about these sorts of things are shocked that despite how hard it is for them to get by, that these companies are making that much money after all the expenses are covered.
No matter how you slice it, $11B is a LOT of cash.
Second; Exxon is a large global company, which means that if we (or they, meaning the gov’t) decides to tax them on their profits as suggested, we run the risk of driving them to a more capitalist-friendly location.
Third; The price of oil dropped ($10 a barrel in 2 days), presumably because speculators took Bush at his word when he said we’d drill off shore and in ANWAR. Congress flaked on the bill and ran like cowards toward their summer breaks without passing a bill allowing it. It’s now back on the rise. The speculators know that should we start to drill, as soon as the first spade hits the earth, that OPEC will flood the market with cheaper oil, making drilling FAR less viable for a company concerned with profits such as Exxon.
On the other hand, if we allow drilling, we face stiff opposition from the greens who, while well intentioned, could bring about if we heed their chicken-little warnings, the downfall of the American economy.
What to do?
The windfall profits tax is as dumb an idea as corn gas. It’s knee-jerk politcal grandstanding and won’t in my opinion see the light of day. It’s only because we’re on the threshhold of an election that we’re even seriously talking about it.
Tarriffs? Sure, we could tarriff every drop that comes in and make the raw product that much more expensive, but those costs won’t be borne by the companies, but passed on to the end purchaser.
Drill? This, I think, is a must. We have to drill here and we have to drill now. We have to manage the product that comes out of the ground and ensure that not one molecule leaves the states. I think that we can drill and we can do so efficiently and safely causing little to no harm. I think that should an accident occur, that the leases should outline penalties so severe that not even Exxon would cut the corners that usually lead to these kinds of things.
At the same time, I think the companies like Exxon ought to be forced to contribute to a fund that seeks alternate energies, not just taxed to the tits, but forced to provide meaningful assistance and actually help build the bridge to alternative energy sources.
You can call it a tax, but the end result must be a)that the critters wouldn’t be able to put their grubby little booger hooks on that money and b) that with at least 3 billion a quarter from all the oil bigs combined, that the future of alternative energies would get a serious shot in the arm that wouldn’t come from our pockets.
The problem is that the price of fuel effects everyone in their own economy of scale, no American should have to choose between fuel and medicine or food. It’s not right, and we’re better off than that. On preview I’ve noticed that RNATB echoes the “you’ve been getting off easy America” line. Well, that may be, but we’re hurting now, and by proxy, so is the rest of the world. Imagine if you will 2008 without America. Would things be the same? You can bet not. We’ve done more for the world in the last 200 years than any one country on the entire planet. We’ve gotten off “easy” regarding gas prices, but we’ve put more out there in product, talent, knowledge, charity and productivity than anyone else ever has. Period. So, think what you want, but we, and through us the world, deserves better than this.
Gees ,I was given a lesson by you guys about speculation in oil prices. You informed me it is supply and demand driving up the prices. No ,you informed me,China and India are driving up the cost and it will only go up with their demand. So we were pushing 150 a barrel and now a couple weeks later we are under 120. A 20 percent drop . Must have been severe drop in usage. Except your point was that can’t happen.Ergo speculation is proven.
Now you swallow more oil company talking points. Get some skepticism. They lie through their teeth ,always have and always will. When do you begin to doubt them?
Cite?
You want us to buy this, give better evidence than, “My yogi told me” or “A lady made up some shit and cited herself.” I mean c’mon, why do you believe you?
No, they manipulate the truth through their teeth. Outright lying will come back on them like outdated yogurt. The higher up you get in the food chain, the slicker you’ve got to be regarding what the masses hear (see Bill Clinton for an example). Consistently we’re given versions of the truth that are close enough to accurate that it would be too difficult or too much work to question it. Soon enough we’re preaching what we’re told as water-cooler gospel.
All that said, you’ve gotta come up with something a little meatier, bro.
http://www.washingtonpost.com/wp-dyn/content/article/2005/11/15/AR2005111501842.html At the beginning of the Bush /Cheney presidency the oil companies met with them setting up an oil policy. They denied the meeting even when testifying in front of congress. They were of course not under oath like Bush and Cheney insisted upon when they spoke to congress. Wonde why they felt the need to not be sworn in?
No, dillhole, Bush announced that he was pursuing offshore and ANWR drilling, and prices(somewhat irrationally, as both areas will take some years to develop, but the commodities market is always irrational) fell in anticipation of an increased supply from that, when the Dems boogied out of DC with their tails between their legs, avoiding the issue altogether, prices have started inching back up.
Wait…our government held meetings with the PEOPLE PROVIDING OIL on OIL POLICY??? WTF OMG!!
Why they kept it secret, who knows. Maybe they realised that there’s a significantly large number of idiots in the world who would go all headless chicken because the White House met with the PEOPLE PROVIDING OIL to discuss OIL POLICY.
The financials are published quarterly, under stirct guidelines. If you don’t understand them, what are we to do? Unless you have evidence that Exxon is cooking the books?
As the article says - it was about energy policy, not oil policy. Big, big, difference which is why they tried to hide it.
You see no relationship between oil and energy? :dubious:
What can we do? Not a hell of a lot.
You can pay good money to read analyst reports from sell-side schmucks who know their way around financials but don’t know shit about the industry. You can try to read a few books on financials analysis and try to punt with your own money. You can spend a huge amount of time learning the nuances of an industry to try to guess what corporations are hiding behind their 100% compliant balance sheets and p&ls.
But most of the time, we don’t know what we don’t know.
It’s not even because big companies are automatically cheats. The art is building a financial statement that meets GAAP, fulfills all of the SEC requirements, manages earnings in line with street expectations, supports the company’s tax positions, and conceals as much as possible from the competition. Our competitors benchmark the crap out of our financials, and believe me, the feeling is mutual. There is a fine art to producing external financials, and it is anything but straightforward. Taking SEC filings at face value is a fabulous strategy for losing shitloads of money in any securities market.