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EVA is the net profit less the capital charge ($) for raising the firm's capital. The idea is that value is created when the return on the firm's economic capital employed exceeds the cost of that capital. This amount can be determined by making adjustments to GAAP accounting. There are potentially over 160 adjustments but in practice, only ...
In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, and taxes, and other expenses for an accounting period. [1] [better source needed]
In UNSNA, the value at current prices of the gross capital stock is obtained, by using price indices for fixed assets at current replacement cost, irrespective of the age of the assets. The net, or written-down value of a fixed capital asset is equal to its current replacement cost, less CFC accrued up to that point in time.
This basic principle is usually applied to corporate accounting, but the fundamental differences between gross and net income can be applied to personal finance in a way that can help you budget ...
"Gross" means total product, regardless of the use to which it is subsequently put. "Net" means "Gross" minus the amount that must be used to offset depreciation – ie., wear-and-tear or obsolescence of the nation's fixed capital assets. "Net" gives an indication of how much product is actually available for consumption or new investment.
Return on capital (ROC), or return on invested capital (ROIC), is a ratio used in finance, valuation and accounting, as a measure of the profitability and value-creating potential of companies relative to the amount of capital invested by shareholders and other debtholders. [1] It indicates how effective a company is at turning capital into ...
In national accounts, net output is equivalent to the gross value added during an accounting period when producing enterprises use inputs (labor and capital assets) to produce outputs. Gross value added is called "gross" because it includes depreciation charges (or more precisely, consumption of fixed capital). If the value of depreciation is ...
Hence, CFC is equal to the difference between aggregate gross fixed capital formation (gross investment) and net fixed capital formation (net investment) or between Gross National Product and Net National Product. Unlike depreciation in business accounting, CFC in national accounts is, in principle, not a method of allocating the costs of past ...