A Breakdown Of S&P 500 Company Costs Since 1994

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	A Breakdown Of S&P 500 Company Costs Since 1994 Corporate profit margins are right at record highs. Coming out of the financial crisis, fattening profit margins have helped corporate profits surge despite lackluster revenue growth. "Firms have enjoyed a secular increase in the productivity of labor and capital as well as technological innovations such as real-time inventory management, reducing both fixed and variable costs," said Goldman Sachs' Amanda Sneider in a new research note. "Low inflation in terms of commodity inputs and labor costs have been tailwinds. Taxes and interest rates have never been more favorable for the profitability of firms." Economists and analysts are split as to what happens next. Some think there's room for further expansion. Others think they're doomed to collapse. "Looking forward, the forces that influence margins are equally balanced between upside and downside," said Sneider. "We forecast trailing four quarter net margins will remain at peak levels in 2014 before rising to a new peak of 9.0% in 2015." For some historical context, Sneider offered this chart showing how each expense component contributed to widening margins. "Rather than one major factor pushing margins to record levels, over the last 20 years almost every component of the income statement has shrunk relative to sales," she noted. Read »