Difference between revisions of "Different models of profit"

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In [[Management Control|Management Control]]@mbi there are two different concepts for profit:
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In [[Management Control|Management Control]] there are two different concepts for profit:
 
* [[The economic concept of profit|The economic concept of profit]]
 
* [[The economic concept of profit|The economic concept of profit]]
 
* [[The accounting concept of profit|The accounting concept of profit]]
 
* [[The accounting concept of profit|The accounting concept of profit]]
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[[Category:mbi]]
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{| class="wikitable"
 
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!The economic concept of profit
 
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!The accounting concept of profit
 
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|-
 
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|Cash Based
 
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|Accrual based
 
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|-
 
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|Future Oriented
 
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|Hindsight oriented
 
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|-
 
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|Decision Support
 
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|Reporting to the outside world
 
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|-
 
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|Time Value ([[WACC|WACC]])
 
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|Only interest taken into account (not full cost of capital)
 
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|-
 
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|Multi period
 
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|One period
 
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|-
 
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|}
 
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The cost of capital is ''severely'' underestimated in the accounting concept of profit.
 
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[[Category:finance]]
 
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[[Category:M18]]
 
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[[Category:Term]]
 

Revision as of 18:49, 26 August 2020

In Management Control there are two different concepts for profit:

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