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Gold/Mining/Energy : Mirant Corporation (MIR) -- Ignore unavailable to you. Want to Upgrade?

To: Softechie who wrote (212)	2/21/2002 1:20:27 PM
From: Oeconomicus	Read Replies (2) \| Respond to of 903

w/o any financing their margin is about 1.5%. Take a look at interest expense and net cash from operation. Which "margin" are you talking about and what is it about interest and cash flow that we should take a look at? I don't get your point?

To: Softechie who wrote (212)	2/21/2002 6:21:00 PM
From: Asymmetric	Read Replies (2) \| Respond to of 903

Softechie, Return on Capital is The Better Metric I think what you are looking for is a way to compare Mirant to other utilities, and a way to see if the numbers are telling/confirming that MIR is a well run company. Return on Capital is normally what is used for these purposes is my understanding. For ex, when a utility goes through the rate process where it asks for an increase in rates (not too many I know ask for a decrease!) it generally lays out its expenses in front of the utility commission, in the form of operating costs and capital expenditures. The utility commission then judges whether these expenses were reasonable for conducting its business of generating and transmitting electricity. It may allow some and disallow others. Anyway after it has assumed its final form, they then calculate what they feel will be a reasonable a rate of return - which is the return on capital the utility needs to employ to operate, maintain and construct it's business. This rate of return "allowed" is normally around 9-11%. So while you are right that profit margins appear razor thin at 1.5%, return on capital last year was 12.5% which is a bit better than most run of the mill regulated utilitites. Hope this helps. Peter.