Originally Posted by
Softpayman
It was 15% stated where? How many years did we get that for?
We didn't get 15% of our income. Bear with the example, someone correct me if I'm wrong.
Old way:
Annual Company revenue: $100
Annual cost: $91
Annual pre tax profit: $9
Annual pretax profit margin: 9%
$9 x .15= $1.35
$1.35 minus the amount it takes to pay everyone retirement plus. Which is 5% of YOUR income. Let's call it 35 cents for giggles. Now there's a dollar left over to split between all the employees eligible for profit sharing. They divide that dollar by the total payroll. Let's call it $7.
1/7= 14.28%
So you get a check for 14.28% of YOUR income.
New way:
Pretax profit of $9 or 9% like before.
$9x.10= 90cents
.90-(7*.05)= 55cents.
.55/7= 7.86% of YOUR income sent to you in a check.
Now let's say the company killed it. And revenue was $100 on $80 of total cost for a pretax profit of $20 and 20%.
$18x.10+$2x.20=$2.20
$2.20-.35(retirementplus)=$1.85
$1.85/7= 26.43% of YOUR income gets sent to you in a check.
Under the old rules on that larger profit you would have gotten 37.86% of YOUR income sent to you in a check.