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LIQUIDITY: The ease of converting an asset into money (either checking accounts or currency) in a timely fashion with little or no loss in value. Money is the standard for liquidity because it is, well, money and no conversion is needed. Other assets, both financial and physical have varying degrees of liquidity. Savings accounts, certificates of deposit, and money market accounts are highly liquid. Stocks, bonds, and are another step down in liquidity. While they can be "cashed in," price fluctuations, brokerage fees, and assorted transactions expenses tend to reduce their money value. Physical assets, like houses, cars, furniture, clothing, food, and the like have substantially less liquidity.
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                           CORPORATE PROFITS: The total accounting profits received by corporations. Corporate profits are the official item in the National Income and Product Accounts maintained by the Bureau of Economics Analysis that measures profit earned by the household sector for supplying entrepreneurship services through corporations, and to some degree capital and land services, too. This is one of five official factor payments making up national income. The other four are compensation of employees, rental income of persons, net interest, and proprietors' income. Corporate profits the second largest factor payment category, usually coming in around 20 to 25 percent of national income. As accounting profits, corporate profits are the difference between total revenue and total explicit accounting costs, and they may or may not correspond closely to economic profit. Corporate profits are separated into three categories: (1) retained earnings (undistributed corporate profits), (2) dividends (distributed corporate profits), and (3) taxes (corporate profits taxes or corporate profit taxes). Dividends, the proportion paid to the household sector, is usually about one-third of corporate profits, give or take a few billion dollars.Somewhere in the deep recesses in the history of the development of the National Income and Product Accounts, someone likely surmised that corporate profits were an appropriate way to measure the services of entrepreneurship. And without question, a portion of corporate profits compensates entrepreneurs for their risk-taking and organizational activities. However, a sizeable portion of corporate profits compensates shareholders for their ownership of capital and land, as well. While some of the capital, land, and natural resources used by corporations are compensated with interest payments on borrowed funds, rent and royalty payments, a fair amount of compensation for these resources are in the form of corporate profits. Because a portion of corporate profits is payment for the use of capital goods, it receives a capital consumption adjustment before being included as national income. The capital consumption adjustment is part of gross domestic product, but not part of national income. As such, any depreciation of the capital used by corporations is deducted before calculating the corporate profits.
Recommended Citation:CORPORATE PROFITS, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: July 18, 2025].
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The portion of aggregate output U.S. citizens pay in taxes (30%) is less than the other six leading industrialized nations -- Britain, Canada, France, Germany, Italy, or Japan.
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"A winner is someone who recognizes his God-given talents, works his tail off to develop them into skills, and uses those skills to accomplish his goals. " -- Larry Bird, basketball player
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FTC
Federal Trade Commission
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