LTTE

[underpants]

--Original article --
First of all, let's define what profit is for a corporation. Simply put, gross profit is the difference between the total revenue and total expenses.

What is really important is the gross profit as a percentage of the revenue. This is commonly known as EBIT (Earnings Before Interest and Taxes). In many capital-intensive industries (such as airlines, automobiles, construction, manufacturing, mining, etc.) a variant of this measure is used, one known as EBITDA, which also deducts depreciation and amortization from the earnings calculation.
http://www2.timesdispatch.com/news/commentary/2010/dec/05/ed-bruno05-ar-693876/

--Response---
Column Had a Few Myths In It As Well

In Ben Bruno's Commentary column, “Government Myth: Profit is ‘Obscene,’” he begins with several incorrect definitions and follows with several incomplete calculations and points.

Gross profit is total revenue (sales) less the cost of goods sold (COGS) — it does not include overhead and payroll. Gross profit does not include total expenses. Earnings before interest and taxes (EBIT) is not a percentage,it is a number. EBIT equals operating revenue — operating expenses plus non-operating revenue. Operating revenue is the regular day-to-day activities of a business and includes COGS. Operating expenses includes administration, cost of sales, and research and development. The percentage Bruno uses is called the gross profit percentage.

In mentioning EBIT, the tax issue normally would be addressed. Exxon paid no U.S. federal taxes in 2009. Zero. General Electric likewise paid no federal taxes in 2009. Zero. But there were all those colorific graphics that took up so much space.

The obvious issue not addressed is in the health-care industry. It is not the size of profits that is clearly the problem — it is the existence of profits. The U.S. (employees and employers) pays about 250 percent what the rest of the industrialized world pays due to profits. One of the oddest arguments against this current situation is that health care “accounts for 16 percent of GDP.” This leaps directly over the obvious question of "Why is this one industry soaking up so much of our money?" The U.K., with its National Health Service, pays about 8 percent of GDP, Germany 11 percent, France 10 percent, Japan 7 percent, and Canada 10 percent.

Bruno's article was brief in text but it began with errors and continued with omissions.

http://www2.timesdispatch.com/news/letters-to-the-editor/2010/dec/12/letters-airtran-isnt-such-great-deal-ar-708773/