[OPE-L:6105] Re: falling profits

From: Gerald_A_Levy (Gerald_A_Levy@email.msn.com)
Date: Mon Oct 29 2001 - 08:46:30 EST

Re Fred's [6104]:

> I went back to check the data
* (what data, Fred?)
> and
> discovered that about half of the decline in nonfinancial sector net
> profit that I discussed in my previous post was indeed due to increased
> interest payments as a percentage of gross profit (net profit +
> interest).  The ratio of net profit to gross profit declined from 0.77 in
> 1997 to 0.64 in the second quarter of 2001.  <snip, JL>
> This result surprises me, because interest rates did not increase that
> much from 1997 to 2000 and have of course decreased in 2001.  So it would
> be interesting to look into this result further.  Anybody have any further
> explanations?

It might be interesting to disaggregate this data to see whether there
are significant sectoral inequalities regarding indebtedness.  E.g. it would
be interesting to inquire about the indebtedness of so-called 'high tech'
firms offering stocks on the NASDAQ and compare that to the level
of indebtedness of the rest of the non-financial corporate sector to
determine whether there is a  correlation of  firm indebtedness to the
so-called 'Internet bubble'.

In solidarity, Jerry

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