Rick,
Thank you for your response. I would love to see you take the numbers they offered and break them down the same way I did.
Then I could see in black and white how these margins worked. Until I see that someone can do the math (with whatever margins they want to use), then I can't just take your word for it.
Example: If the numbers completely represented temp placements, and FAMH no expenses (absolutely zero, no office rents, no stock promotion costs, no office salaries, nothing), and you paid all the temps one-third of what you were paid for them, then your profit margin (where x=what the temps get) is calculated by 3x (earnings) - x(temp pay), which leaves you with 2x. That is, if you can charge the clients $3 million, pay the temps $1 million, you have a $2 million profit on $3 million in revenues, i.e., 66 percent. Not close to the 74 percent claimed.
That is assuming you don't have to pay any operating expenses for your company. If you charge clients four times (sounds awfully high to me!), then you can get to 75 percent, but you still have your expenses to consider.
Since they typically have only 15 percent of revenues from permanent placements, and 85 percent from temps (I got this info from Ira) the bulk of your earnings/revenue ratio is tied up in the temp placements. So you must use that as the base of your calculations.
I used (as one poster pointed out) very conservative numbers to figure that the earnings just aren't what they claimed. I assumed double the ratio of permanent placements as usual and counted them as "pure profit", i.e., one to one ratio. I assumed the quarter of their dreams! I didn't work in the financing arm of the company since it was relatively small, about $75,000.
I welcome any mathematical challenge to the above numbers.
The message of some posts seems to be "we know the earnings are wrong, but we don't mind." Wow. I couldn't deal with that. |
