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BENEFIT-COST ANALYSIS: An analytical technique that compares the benefit generated by an activity with its opportunity cost of production. The rule is that if benefits exceed costs, then the activity is efficient and should be undertaken. In some cases the end result of benefit-cost analysis is net benefits, which is benefits minus cost. A positive value means the activity is efficient. In other cases the end result of benefit-cost analysis is a benefit-cost ratio, which is benefits divided by costs. A ratio greater than 1.0 is thus the indication of an efficient activity.
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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, 2000-2020. [Accessed: September 30, 2020].
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Today, you are likely to spend a great deal of time watching infomercials seeking to buy either a New York Yankees baseball cap or a solid oak entertainment center. Be on the lookout for telephone calls from long-lost relatives.
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In his older years, Andrew Carnegie seldom carried money because he was offended by its sight and touch.
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"The truth is not for all men, but only for those who seek it. " -- Ayn Rand, writer
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EOE
European Options Exchange
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