Originally Posted by
Numero Crunchero
sqwak7700
was the fuel surcharge accounted for in last year's profit numbers?.
Despite the conspiracy theorists, there is nothing untoward in how the fuel surcharge is accounted for. The total fuel bill for 1st half last year was close to $8billion, but after hedging gains and fuel surcharges the accounting cost was around $5.8billion.
Maybe a numerical example will help. Lets say for the full year turnover is $60billion with fuel surcharge of say $5billion. Lets say fuel costs were $17billion before hedging/surcharges(last year it was about 28.8% of turnover). In their accounting they will say turnover $60B, fuel $12billion($17B less $5B surcharges) take away all other costs and say profit of $5billion.
Now if we take surcharge as revenue, turnover is now $65B, take away all other costs and also take away the increased fuel cost of $17B and you end up with a profit of $5B!
So if we accounted for the surcharge as revenue our profit margin(per centage) would fall as we have $5B/$65B versus their current accounting technique of $5B/$60B.
I know there is a natural distrust of anything we don't understand but in this case that mistrust is misplaced!
Well, you certainly lived up to your name. I stand corrected, my apologies.
I'll put my conspiracy theory hat back in the closet for a while.
