2 ms·
Capital intensive businesses like Comcast with lots of plant and equipment tend to have lower operating margins because of all the D&A.
by eigenvalue 3y ago
Capital intensive businesses like Comcast with lots of plant and equipment tend to have lower operating margins because of all the D&A.
- runako 3y agoThis is one reason why operating margin alone doesn't speak to the competitive nature of the market in which a company competes. Other reasons include current position in a cyclical business cycle, quality of management, corporate history (e.g. accumulated debt), etc. Also note that the oil companies I mentioned have higher margins than Comcast, and they operate businesses that are also capital intensive with lots of plant and equipment. They operate in more competitive markets than Comcast, and yet they have higher operating margins. Different markets produce different results.