Last year sales: ₩76.78 trillion
This year sales: ₩67 trillion
(Down 13%)
Last Year Operating Profit: ₩10.85 trillion
This Year Operating Profit: ₩2.4 trillion
(Down 78%)
No, I don’t think Joe Biden caused this (LOL)
I am posting this because it is interesting for a dozen reasons.
Mostly because it serves as a prime example of a twin set of facts (see post below)
1) Companies, large and small, are “vulnerable”
It is not unusual for 100% of their profits to come from the last 10-20% of sales.
Whether it is Samsung, or Tesla, or a Ma & Pa Pizza shop, so much of their money goes to pay for overhead, That a 10% drop in sales can cause their profit to drop to zero and a 15% drop in sales can mean they operate in the red.
.
Using this information we can easily see how a relatively small drop in the economy can cause a relatively large drop employment. Sadly, this fact of life does not change even if we adopt liberal policies, even if we adopt socialism, even if we adopt communism. It’s math and it sucks, but it is true.
2) Companies, large and small, have to charge very large mark-ups to survive
Did you ever read that there is $0.89 of ingredients in a $10 pizza?
Or wonder why big Pharma charges $50-$120 for insulin, when the ingredients cost only $6?
Good Lord, what about the mark-up they get on those little plastic protectors for cell phones? (Should cost like 25-cents, right?)
Well that’s why.
Samsung’s sales dropped a mere 13%
That caused its operating profit to drop 78%
Had their sales dropped just 4% more they’d be operating in the red.
Wow. We all knew this but it kinda makes things clear.
