Proving that the corporations 32% in taxes, and employee costs are minimal (~10%)

Proving that the corporations 32% in taxes, and employee costs are minimal (~10%)
Today, I analyzed the 500 companies on the S&P 500 to quantify and qualify the index's metrics. Moreover, I also wanted to discern the weighted average gross margins, the weighted average pretax margins, as well as the weighted post tax margins (i.e. weighted net profit margins). Finally, I would also like to calculate the tax rate of the average S&P 500 company based on the differential of the weighted average pretax margins and the weighted average profit margins.
Here are my abbreviations that I¡¦m using: S = Sales (i.e. Revenue) COGS = Cost of goods sold WAGM = Weighted Average Gross Margin CSGADAI = Cost of Selling, General Administrative, Depreciation, Amortization, and Interest -„³ Basically, this is all costs excluding the COGS and Taxes. All these costs are deducted from revenue, just like the COGS, to arrive at the Net Income (NI). WAPTM = Weighted Average Pre-Tax Margin COT = Cost of Taxes WANPM = Weighted Average Net Profit Margin NI = Net Income (i.e. Profit)
Regarding my liberal use of the term ¡§Weighted Average¡¨ for my calculations as opposed to the ¡§Arithmetic Average¡¨: To understand this distinction, let¡¦s analyze the WANPM. The WANPM is calculated by summing the entire column of MS Excel which has the earnings of the companies. Note that some of the values maybe negative indicating a loss. The Earnings for each company is in Column E, and the Sales figures for each company is in Column J. Therefore, the WANPM is:
=SUM(E2:E501)/SUM(J2:J501)
Also, this method is more robust than simply averaging all the individual profit margins. As a comparison, the WANPM and the Arithmetic NPM are: 0.04924734 and 0.074364, respectively.
Using this WA approach, I figured out that the WAGM of the companies are: WAGM - WeightedGrossMargin 0.2739 WAPTM - WeightedPreTaxMargin 0.0728 WANPM - WeightedNetProfitMargin 0.0492
Therefore, the Income Statement for a representative company on the S&P 500 can be recreated who nominal revenue is $1. We have the following Income Statement, and at the end, we will solve the average tax rate for the representative company:
S 1.0000 (COGS) (0.7261) WAGM ¡V WeightedAverageGrossMargin 0.2739 (CSGADAI) (0.2011) WAPTM - WeightedAveragePreTaxMargin 0.0728 (COT) (0.0236) ---------------------------------------------------------------------------------------------- WANPM - WeightedAverageNetProfitMargin 0.0492
From a WAPTM of 0.0728, the company pays out 0.0236 in taxes. This implies that the average company pays 0.0236/0.0728=32.4% in corporate taxes.
Some insights that I¡¦d like to point out here is that the cost of the employees (i.e. the wages) is actually very small when compared to the other costs. The wages, which are a component of the CSGADAI, should only be about half of this entire figure, which would mean half of 0.2011, or about .10 the total revenues of a company. On the other hand, the COGS is .73. Therefore, it is not so valid to state that the wage costs or the tax costs are the biggest costs of a corporation.
Regarding taxes: The corporation only pays 2.4% of their total REVENUES, on average. This is still 32.4% of their Pre-Tax Income. I¡¦m not saying that this low tax rate is fair/unfair, but we should definitely think about this and make our own insights.
Regarding the average P/E, P/B, P/S, P/CF, and ROE on the S&P 500, here are the weighted averages:
P/E 14.59230769 P/B 1.449210896 P/CF 5.948592645 P/S 0.718632308 ROE 0.099313346
Note that the WANPM can be deduced from these figures as simply being the P/E / P/S = 0.0492. Similarly, the ROE can be deduced by P/B / P/ E = 0.0993, which is also in accordance with my values above. However, only 487 of the 500 companies have reported their book values, so this value only takes into account the 487 which have reported their book values. The 13 companies which didn¡¦t report these values are typically distressed.
Finally, from my experience in regressing and analyzing the S&P 500, I noticed that the WA ratios are: WA P/E ¡V 18 WA P/B ¡V 2.8 WA P/CF ¡V 10 WA P/S ¡V 1.5 WA ROE ¡V 16%
Reply to
2.7182818284590...
Today, I analyzed the 500 companies on the S&P 500 to quantify and qualify the index's metrics. Moreover, I also wanted to discern the weighted average gross margins, the weighted average pretax margins, as well as the weighted post tax margins (i.e. weighted net profit margins). Finally, I would also like to calculate the tax rate of the average S&P 500 company based on the differential of the weighted average pretax margins and the weighted average profit margins.
Here are my abbreviations that I'm using: S = Sales (i.e. Revenue) COGS = Cost of goods sold WAGM = Weighted Average Gross Margin CSGADAI = Cost of Selling, General Administrative, Depreciation, Amortization, and Interest -„³ Basically, this is all costs excluding the COGS and Taxes. All these costs are deducted from revenue, just like the COGS, to arrive at the Net Income (NI). WAPTM = Weighted Average Pre-Tax Margin COT = Cost of Taxes WANPM = Weighted Average Net Profit Margin NI = Net Income (i.e. Profit)
Regarding my liberal use of the term "Weighted Average" for my calculations as opposed to the "Arithmetic Average": To understand this distinction, let's analyze the WANPM. The WANPM is calculated by summing the entire column of MS Excel which has the earnings of the companies. Note that some of the values maybe negative indicating a loss. The Earnings for each company is in Column E, and the Sales figures for each company is in Column J. Therefore, the WANPM is:
=SUM(E2:E501)/SUM(J2:J501)
Also, this method is more robust than simply averaging all the individual profit margins. As a comparison, the WANPM and the Arithmetic NPM are: 0.04924734 and 0.074364, respectively.
Using this WA approach, I figured out that the WAGM of the companies are: WAGM - WeightedGrossMargin 0.2739 WAPTM - WeightedPreTaxMargin 0.0728 WANPM - WeightedNetProfitMargin 0.0492
Therefore, the Income Statement for a representative company on the S&P 500 can be recreated who nominal revenue is $1. We have the following Income Statement, and at the end, we will solve the average tax rate for the representative company:
S 1.0000 (COGS) (0.7261) WAGM - WeightedAverageGrossMargin 0.2739 (CSGADAI) (0.2011) WAPTM - WeightedAveragePreTaxMargin 0.0728 (COT) (0.0236) ----------------------------------------------------------------------------------------------- WANPM - WeightedAverageNetProfitMargin 0.0492
From a WAPTM of 0.0728, the company pays out 0.0236 in taxes. This implies that the average company pays 0.0236/0.0728=32.4% in corporate taxes.
Some insights that I'd like to point out here is that the cost of the employees (i.e. the wages) is actually very small when compared to the other costs. The wages, which are a component of the CSGADAI, should only be about half of this entire figure, which would mean half of 0.2011, or about .10 the total revenues of a company. On the other hand, the COGS is .73. Therefore, it is not so valid to state that the wage costs or the tax costs are the biggest costs of a corporation.
Regarding taxes: The corporation only pays 2.4% of their total REVENUES, on average. This is still 32.4% of their Pre-Tax Income. I'm not saying that this low tax rate is fair/unfair, but we should definitely think about this and make our own insights.
Regarding the average P/E, P/B, P/S, P/CF, and ROE on the S&P 500, here are the weighted averages:
P/E 14.59230769 P/B 1.449210896 P/CF 5.948592645 P/S 0.718632308 ROE 0.099313346
Note that the WANPM can be deduced from these figures as simply being the P/E / P/S = 0.0492. Similarly, the ROE can be deduced by P/B / P/ E = 0.0993, which is also in accordance with my values above. However, only 487 of the 500 companies have reported their book values, so this value only takes into account the 487 which have reported their book values. The 13 companies which didn't report these values are typically distressed.
Finally, from my experience in regressing and analyzing the S&P 500, I noticed that the WA ratios are: WA P/E - 18 WA P/B - 2.8 WA P/CF - 10 WA P/S - 1.5 WA ROE - 16%
Reply to
2.7182818284590...
On Nov 21, 11:36 am, "2.7182818284590..." wrote:
You are wrong.... Corporations have NEVER paid taxes!
What ever they submit to the Government was collected from the consumers.... It has ALWAYS been a slight-of-hand trick from the uberlib DemonCraps!
Reply to
President Soetoro
Right. And consumers have never paid taxes, since whatever they submit to government is paid for by corporation whose sales go down due to consumers not having those dollars to spend. So corporations end up paying all the taxes!
Or, we could just look at taxes as being money taken out of the system, and recognize that paragraphs like the two above are ludicrous.
Reply to
alexy
You should look at the financial statements of the corporations. According to the financial statements, they, in fact, *DO* pay taxes. They pay out, on average, 32% of their pre-taxed income as taxes.
Reply to
2.7182818284590...

"President Soetoro" wrote in message news: snipped-for-privacy@a12g2000yqm.googlegroups.com...
Total ignorant nonsense. Same shit since Reagan started the destruction of America
Reply to
Sid9
Sid, is the alzheimer bothering you again.....
Let me explain this in simple terms....
Exxon collected $35 Billion last quarter extra from the consumers to turn around and send it to the Government, Whatever corporations "pay" in taxes was already collected from the the person who bought the gasoline.
There's roughly 300 million people in this Country, they paid an extra $116 a month to the Government in taxes via Exxon.
Reply to
President Soetoro
But,but,but,but,but,but,but,but,but,but,but WHADDABOUT BUSH???!!!!!
Hey budd, you know you should'nt waste precious bandwidth trying to reason with poor old sidney. I mean the boy is an Obamunista which means he doesn't have the brain power to support a cough reflex. When old sid coughs I'm sure he soils his knickers. (cough-cough-ssppllaat!)
Reply to
Liberal Whisperer

"President Soetoro" wrote in message news: snipped-for-privacy@j39g2000yqn.googlegroups.com...
messagenews: snipped-for-privacy@a12g2000yqm.googlegroups.com...
Except that's not how it works. Learn something about accounting.
Reply to
Sid9
The very fundamental point you have missed is that corp taxes are paid on PROFITS, whereas employee costs are incurred even when not making a profit.
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Reply to
Rod Speed
You've missed the fundamental point that whatever they list in their financial statements as being taxes they pay, that money comes from the consumers who have bought the goods or services that the corp sells.
Reply to
Rod Speed

"Rod Speed" wrote in message news: snipped-for-privacy@mid.individual.net...
If you had a clue about accounting you would know that the tax comes from the company's profit.
Sales tax is paid directly by customers. Corporate tax come out of profit

Reply to
Sid9
Sid9 wrote
And that profit comes from what consumers pay for the goods and services they sell.
But still comes from what consumers pay for the goods and services that the corp sells.
Reply to
Rod Speed

"Rod Speed" wrote in message news: snipped-for-privacy@mid.individual.net...
If you had a clue about accounting you would know that the tax comes from the company's profit.
Reply to
Sid9
snipped-for-privacy@a12g2000yqm.googlegroups.com...
Neither payment of taxes nor payment of dividends is a true cost of business operations. The disutility of taxes is not born by the operating company but split between shareholders and consumers. And how these are born is discussed as tax incidence.
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Reply to
Michael Coburn

Proving that the corporations 32% in taxes, and employee costs are minimal (~10%)
Today, I analyzed the 500 companies on the S&P 500 to quantify and qualify the index's metrics. Moreover, I also wanted to discern the weighted average gross margins, the weighted average pretax margins, as well as the weighted post tax margins (i.e. weighted net profit margins). Finally, I would also like to calculate the tax rate of the average S&P 500 company based on the differential of the weighted average pretax margins and the weighted average profit margins.
Here are my abbreviations that I¡¦m using: S = Sales (i.e. Revenue) COGS = Cost of goods sold WAGM = Weighted Average Gross Margin CSGADAI = Cost of Selling, General Administrative, Depreciation, Amortization, and Interest -?³ Basically, this is all costs excluding the COGS and Taxes. All these costs are deducted from revenue, just like the COGS, to arrive at the Net Income (NI). WAPTM = Weighted Average Pre-Tax Margin COT = Cost of Taxes WANPM = Weighted Average Net Profit Margin NI = Net Income (i.e. Profit)
Regarding my liberal use of the term ¡§Weighted Average¡¨ for my calculations as opposed to the ¡§Arithmetic Average¡¨: To understand this distinction, let¡¦s analyze the WANPM. The WANPM is calculated by summing the entire column of MS Excel which has the earnings of the companies. Note that some of the values maybe negative indicating a loss. The Earnings for each company is in Column E, and the Sales figures for each company is in Column J. Therefore, the WANPM is:
=SUM(E2:E501)/SUM(J2:J501)
Also, this method is more robust than simply averaging all the individual profit margins. As a comparison, the WANPM and the Arithmetic NPM are: 0.04924734 and 0.074364, respectively.
Using this WA approach, I figured out that the WAGM of the companies are: WAGM - WeightedGrossMargin 0.2739 WAPTM - WeightedPreTaxMargin 0.0728 WANPM - WeightedNetProfitMargin 0.0492
Therefore, the Income Statement for a representative company on the S&P 500 can be recreated who nominal revenue is $1. We have the following Income Statement, and at the end, we will solve the average tax rate for the representative company:
S 1.0000 (COGS) (0.7261) WAGM ¡V WeightedAverageGrossMargin 0.2739 (CSGADAI) (0.2011) WAPTM - WeightedAveragePreTaxMargin 0.0728 (COT) (0.0236) ---------------------------------------------------------------------------------------------- WANPM - WeightedAverageNetProfitMargin 0.0492
From a WAPTM of 0.0728, the company pays out 0.0236 in taxes. This implies that the average company pays 0.0236/0.07282.4% in corporate taxes.
Some insights that I¡¦d like to point out here is that the cost of the employees (i.e. the wages) is actually very small when compared to the other costs. The wages, which are a component of the CSGADAI, should only be about half of this entire figure, which would mean half of 0.2011, or about .10 the total revenues of a company. On the other hand, the COGS is .73. Therefore, it is not so valid to state that the wage costs or the tax costs are the biggest costs of a corporation.
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I think the 'cost of goods sold' probably includes some wages.
Reply to
Andy F.
Then HOW does it work? How does a company come up with the money to pay it's "taxes" if the money isn't collected from the consumer?
Reply to
Ayatollah Obama
Andy F.
You're 100% right. Both, COGS and SGA, seem to include the wages. I think that COGS is mostly used for manufacturers and SGA is mostly used for service oriented industries.
Reply to
2.7182818284590...

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