Different models of profit

In Management Control@mbi there are two different concepts for profit:

• The economic concept of profit
• The accounting concept of profit

The economic concept of profit	The accounting concept of profit
Cash Based	Accrual based
Future Oriented	Hindsight oriented
Decision Support	Reporting to the outside world
Time Value (WACC)	Only interest taken into account (not full cost of capital)
Multi period	One period

The cost of capital is severely underestimated in the accounting concept of profit.