Search results
Results from the WOW.Com Content Network
The value of an aggregate net output is normally understood to be equal to the sum of: gross labour costs (or compensation of employees). gross depreciation (or consumption of fixed capital). income tax and indirect tax paid by producing enterprises, reduced by government subsidies paid to producing enterprises during the same accounting period.
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 ...
"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.
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.
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 ...
The denominator represents the average value of the invested capital rather than the value of the end of the year. This is because the NOPAT represents a sum of money flows, while the value of the invested capital changes every day (e.g., the invested capital on December 31 could be 30% lower than the invested capital on December 30).
It is gross because it makes no allowance for the depreciation of capital. A similar concept for unincorporated enterprises (e.g. small family businesses like farms and retail shops or self-employed taxi drivers, lawyers and health professionals) is gross mixed-income. Since in most such cases it is difficult to distinguish between income from ...
Operating surplus therefore does not necessarily refer to all gross profit income realized in an economy. Profits are also realized from all kinds of property transactions which do not involve new production, such as capital gains, and net profits are often also received from foreign countries or paid to foreign countries. In addition, many ...