That £281,000 is made up as follows: £200,000 complying with government regulation, including nonsense like environmentally approved hot water system, insulation, and the right demographic mix of carers. £25,000 providing the roof, furniture, kitchen and cleaning equipment, linen, plumber & electrician to change tap washers and light bulbs, consumables of various sorts. Another £25,000 to pay the wages. £10,000 is the cost of actually feeding the elderly person and keeping their body odour at acceptable levels, as any family with an aged parent quietly going batty in the attic can tell you. That leaves £21,000 for the entrepreneur, which is what the fight is about.
If you haven’t watched any of the many videos of Warren Buffett and Charlie Munger on the subject of EBITDA then they are worth a look. And are entertaining to boot. Lots available on YouTube.
Paul, thanks. I’m not really interested, or read, in economics, so appreciate nontechnical explanations. My knowledge of economics amounts to Micawber‘s “Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”
That's exactly what the trick is. The original report calls it the EBITDA margin. Which is true. But they call it that knowing that as the information gets repeated this will be translated into "profit6 margin" which is what it isn't, the net profit. It's a useful little trick - until someone points it out.
Indeed, it is no way to run a country. But it’s symptomatic of the way the country is run today, based on fluffy feelings (public sector, altruistic, good; private sector, self interested, profit focussed, bad) which trump the inconvenience of facts.
Not so many years ago we would have had journalists on the prestigious papers (looking at you, The Times of London) who would rubbish such blatant distortion of the facts and at least one political party that recognised the advantages of the private sector in a competitive environment over the public sector in terms of efficiency, motivation to innovate and improve over a bureaucracy with none of these motives; a party that wasn’t ashamed to say that profit isn’t a dirty word.
And if “experts” writing in “quality” press aren’t prepared to make the effort to report accurately and educate their readers, then there is little hope for many of the readers for whom the concepts of debt and equity, and the returns required to them, are mysteries and who quite readily accept that profit returns to equity owners are dead weight costs that would disappear if the enterprise were instead 100% publicly owned, rather than manifesting differently as government debt service costs (probably not hypothecated and therefore invisible), opportunity costs of alternative public sector activities and marginal tax charges.
That £281,000 is made up as follows: £200,000 complying with government regulation, including nonsense like environmentally approved hot water system, insulation, and the right demographic mix of carers. £25,000 providing the roof, furniture, kitchen and cleaning equipment, linen, plumber & electrician to change tap washers and light bulbs, consumables of various sorts. Another £25,000 to pay the wages. £10,000 is the cost of actually feeding the elderly person and keeping their body odour at acceptable levels, as any family with an aged parent quietly going batty in the attic can tell you. That leaves £21,000 for the entrepreneur, which is what the fight is about.
I thought ’profit’ was what was left over after deducting expenditure.
Isn’t calling the 23% ‘profit’ a fraud?
If you haven’t watched any of the many videos of Warren Buffett and Charlie Munger on the subject of EBITDA then they are worth a look. And are entertaining to boot. Lots available on YouTube.
Paul, thanks. I’m not really interested, or read, in economics, so appreciate nontechnical explanations. My knowledge of economics amounts to Micawber‘s “Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”
That's exactly what the trick is. The original report calls it the EBITDA margin. Which is true. But they call it that knowing that as the information gets repeated this will be translated into "profit6 margin" which is what it isn't, the net profit. It's a useful little trick - until someone points it out.
Indeed, it is no way to run a country. But it’s symptomatic of the way the country is run today, based on fluffy feelings (public sector, altruistic, good; private sector, self interested, profit focussed, bad) which trump the inconvenience of facts.
Not so many years ago we would have had journalists on the prestigious papers (looking at you, The Times of London) who would rubbish such blatant distortion of the facts and at least one political party that recognised the advantages of the private sector in a competitive environment over the public sector in terms of efficiency, motivation to innovate and improve over a bureaucracy with none of these motives; a party that wasn’t ashamed to say that profit isn’t a dirty word.
And if “experts” writing in “quality” press aren’t prepared to make the effort to report accurately and educate their readers, then there is little hope for many of the readers for whom the concepts of debt and equity, and the returns required to them, are mysteries and who quite readily accept that profit returns to equity owners are dead weight costs that would disappear if the enterprise were instead 100% publicly owned, rather than manifesting differently as government debt service costs (probably not hypothecated and therefore invisible), opportunity costs of alternative public sector activities and marginal tax charges.