[OPE-L:6356] Archives and reference question

From: Michael Perelman (michael@ECST.CSUCHICO.EDU)
Date: Thu Jan 17 2002 - 21:04:30 EST

Sometime ago, somebody posted to the following citation to the list.  I have
checked the source several times, but it seems to be wrong.

I tried to find it on the archives, but it doesn't seem to be there.

Sloan, Alfred P. 1972. My Years With General Motors, Inc. (Garden City: Anchor
 140: "A word on rate of return as a strategic principle of business.  I am not
going to say that rate of return is a magic wand for every occasion  in
business.  There are times when you have to spend money just to stay in
business, regardless of the visible rate of return.  Competition is the final
price determinant and competitive prices may result in profits which force you
to accept a rate of return less than you hoped for, or for that matter to accept
temporary losses.  And, in times of inflation, the rate-at-return concept comes
up against the problem of assets undervalued in terms of replacement.
Nevertheless, no other financial principle with which I am acquainted serves
better than rate of return as an objective aid to business judgment."
 53: "The profit resulting from any business considered abstractly, is no real
measure of the merits of that particular business.  An operation making
$100,000.00 per year may be a very profitable business justifying expansion and
the use of all the additional capital that it can profitably employ.  On the
other hand, a business making $10,000,000 a year may he a very unprofitable one,
not only not justifying further expansion but even justifying liquidation unless
more profitable returns can be obtained.  It is not, therefore, a matter of the
amount of profit but of the relation of that profit to the real worth of
invested capital within the business.  Unless that principle is fully recognized
in any plan that may be adopted, illogical and unsound results and statistics
are unavoidable."
 160: [not verified] Extract of the report presented to the Executive Committee
on December 6, 1919. "There are other measures for the running of a business;
for example, profit on sales, and penetration of the market, but they do not
supersede return on investment."


Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@ecst.csuchico.edu

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