Absorbed
Categories: Banking, Accounting, Incorporation, Stocks
A can of Coke sells wholesale, for a buck. Profit per can is 60 cents. Sugar cost per can is exactly a nickel. Big fat forest fires mess with the sugar plantation supply, and sugar prices suddenly increase 20%. That nickel of sugar cost per can is now 6 cents. Coke absorbs that cost in the form of making "only" 59 cents a can, rather than to try and raise prices to $1.01, which would pass through to the customer the pain of that sugar price hike. Absorption also happens when one company buys another, absorbing their employees, computer systems, coffee machine maintenance contracts and volume commitments for pink toilet paper. The extra-absorbent kind.