e) Eco and Book are dummy variables that represent the impact of belonging to the treatment groups linked to economic profit
or net profit, respectively.
Gross margin (GM) =TR- Total Variable cost (TVC) Economic profit
= TR [explicit cost + implicit cost] Business profit = TR [explicit cost] Benefit cost ratio (BCR) = Economic profit
/TC (When imputed cost is taken) Benefit cost ratio (BCR) = Business profit/TVC (When imputed cost is not taken)
Based on their TSR and economic profit
for the years 2008 to 2012, the S&P 1,500 companies can be split into four groups that represent a phase in the value-creating life cycle:
This indicator reflects the real economic profit
achieved by the company after covering the operating and financial costs.
Above and beyond simply earning a positive economic profit
, hold each business unit accountable for its own unique performance targets, specifically the economic profit
and revenue growth that management promised to deliver when its current strategy was approved.
Section 2 discusses the standard incorporation of sunk costs into the total cost function and the resulting problem of measuring economic profits
Under competitive conditions, the producer does not make any economic profit
since Total Cost is equal to Total Revenue.
The case covers a financial services start-up and focuses in the areas of business environment, economic profit
, marginal analysis, consumer behavior, and oligopoly.
But he said the firm's economic profit
targets for the period from 2008 to 2011 - set before the onslaught of the financial crisis - is "unlikely to be met" because of new requirements for lenders to hold greater levels of capital following the banking meltdown last year.
Exploiting a renewable resource for maximum economic profit
is the antithesis of sustainable management, right?
Clorox executives said economic profit
will be the "key measure" the company uses to drive enhanced performance, and will restructure its business units accordingly to see where the most economic value is being generated.
Felix Barber and Rainer Strack of the Boston Consulting Group devised a means of reformatting a traditional measure of economic profit
to one that is meaningful for people-intensive businesses.