Are Corporations Profitable?


Do corporations make a profit?  I think it is beyond peradventure that some corporations make a profit.  But do most (i.e., more than half) make a profit?  If more than half do make a profit, how many more than half?

To find an answer (not necessarily the answer), I recently took a look at Table C-1 of the California Franchise Tax Board’s 2012 Annual Report.  This table provides data with respect to the total number of corporations that file returns with with the State of California by year.  In 1950, the first year reported, the number of corporations was only 42,377.  By 2011, the most recent year reported, the number had increased increased to 754,315.  Note that these are corporations that file California tax returns.  Thus, these data are not limited to California corporations but include corporations incorporated in other states.

The percentage of corporations reporting net income has managed to stay above 50%, but only barely in some years.  The low point was 1991 when only 50.760% of corporations reported net income.  The percentage peaked in 1978 with 62.518% of corporations reporting net income.   The median is 55.961% and mean is 56.091%.

The percentage of corporations reporting net income when added to the percentage of corporations reporting a net loss does not sum to 100% because many corporations report neither net income nor a net loss.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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