How does economic profit differ from net income?
a. the major difference is that economic profit includes acapital charge, that is, a cost of using all capital. in contrast,net income includes a charge for using debt capital (interest) butno charge for using equity capital. some measures of net incomerely primarily on financial reporting numbers and others, such asEVA, include adjustments such as deducting cash taxes rather thantax expense or cpitalizing rather than expensing R&D
b. the major difference is that net income includes a capitalcharge, that is, a cost of using all capital. in contrast, economicprofit includes a charge for using debt capital (interest) but nocharge for using equity capital. some measures of net income relyprimarily on financial reporting numbers and others, such as EVA,include adjustments such as deducting cash taxes rather than taxexpense or capitalizing rather than expensing R&D
c. the major difference is that economic profit includes acapital charge, that is, a cost of using all capital. in contrast,net income includes a charge for using debt capital (interest) butno charge for using equity capital. some measures of economicprofit rely primarily on financial reporting numbers and otherssuch as EVA, include adjustments such as deducting cash taxesrather than tax expense or capitalizing rather than expensingR&D
d. the major difference is that net income includes a capitalcharge, that is, a cost of using all capital. in contrast, economicprofit includes a charge for using equity capital. some measure ofeconomic profit rely primarily on financial reporting numbers andothers, such as EVA, include adjustments such as deducting cashtaxes rather than tax expense or capitalizing rather than expensingR&D
How does economic profit differ from net income?
a. the major difference is that economic profit includes acapital charge, that is, a cost of using all capital. in contrast,net income includes a charge for using debt capital (interest) butno charge for using equity capital. some measures of net incomerely primarily on financial reporting numbers and others, such asEVA, include adjustments such as deducting cash taxes rather thantax expense or cpitalizing rather than expensing R&D
b. the major difference is that net income includes a capitalcharge, that is, a cost of using all capital. in contrast, economicprofit includes a charge for using debt capital (interest) but nocharge for using equity capital. some measures of net income relyprimarily on financial reporting numbers and others, such as EVA,include adjustments such as deducting cash taxes rather than taxexpense or capitalizing rather than expensing R&D
c. the major difference is that economic profit includes acapital charge, that is, a cost of using all capital. in contrast,net income includes a charge for using debt capital (interest) butno charge for using equity capital. some measures of economicprofit rely primarily on financial reporting numbers and otherssuch as EVA, include adjustments such as deducting cash taxesrather than tax expense or capitalizing rather than expensingR&D
d. the major difference is that net income includes a capitalcharge, that is, a cost of using all capital. in contrast, economicprofit includes a charge for using equity capital. some measure ofeconomic profit rely primarily on financial reporting numbers andothers, such as EVA, include adjustments such as deducting cashtaxes rather than tax expense or capitalizing rather than expensingR&D
