Opinion ID: 291382
Heading Depth: 2
Heading Rank: 5

Heading: Rate of Profit

Text: 57 We now turn to the second element of the lost net profits figure, the rate of net profit determination. The master concluded that during the damage period, Radiant would have had a net profit of 16% on its lost sales. Switzer suggests that the figure, on its face, is excessive. Though at first blush 16% appears to be a high rate of return, it need only be noted that the industry, during the damage period, was a burgeoning one with a concomitant high risk of failure thus justifying what might otherwise be an abnormal net profit. 58 Switzer also assails the figure on an arithmetical ground. It is argued that the master arrived at the 16% figure by rounding off 16.6% which, in turn, was the mean between 19.05% (Radiant's highest estimate) and 14.15% (Radiant's actual net profit during the damage period as supposed by the master). The master, it is urged, miscalculated the last figure, Radiant's actual net profit during the damage period being only 11.93%. Thus the mean between Radiant's correct actual rate of net profit and highest estimate of net profit rate (11.93% and 19.05%) is 15.49% which should be rounded off to 15%. This one per cent difference is claimed to have added $59,000 to the judgment. 59 The fallacy in the argument is the assumption that the master calculated the net profit ratio solely on an arithmetical basis. He did no such thing. Although he did calculate the mean between the highest estimate of Radiant's net profit ratio and what was thought to have been Radiant's actual net profit ratio during the damage years, the record shows that the mean was not meant to be the final figure. Obviously 16.6% when rounded off does not equal 16%. Moreover, the master made certain very imprecise, yet nevertheless proper, downward adjustments. One such adjustment was made to take Switzer's net sales point into consideration. 60 The resulting net profit figure is, then, a composite one, combining arithmetical calculations and value judgments attributable to imprecise factors. We cannot determine how much weight the master gave to the various components in arriving at his conclusion. Since the result is not clearly erroneous, we cannot make an adjustment to the final figure simply because of error in one of the components when we cannot know how much weight, if any, was given to the erroneous element. It is improper to isolate individual factors entering into a decision and treat them as controlling considerations. Cf. United States of America v. I. C. C., 396 U.S. 491, 90 S.Ct. 708, 24 L.Ed.2d 700 (1970). We find no error. 61 The judgment appealed from should be affirmed. 62 Affirmed.