Term
| Calculation of Economic Profit |
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Definition
EP = Accounting - Cost of Capitol
EP = TR-Cost of Land- Cost of Labor- Cost of Capitol |
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Term
| NOPAT - Net operating Profit After Taxes |
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Definition
EP= NOPAT - (WACC*Invested Capitol)
or Revenue- COGS- SG&A (Selling and Gen Admin costs) - Tax Rate |
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Term
| 2nd Way to Write Economic Profit |
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Definition
[(1-Tax Rate)] * (Revenue-COGS-SG&A)- WACC * (invested Capitol)
WACC is each component of Capitol |
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Term
| EBIT _ Earnings Before Interest and Taxes |
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Definition
| On the Income Statement- The Bottom Line |
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Term
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Definition
Interest without income expenses
EP= NOPAT- cost of Debt - Cost of Equity Capitol |
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Term
| Step by Step Calculation of EP |
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Definition
Income Statement contains EBIT
NOPAT
Remove AP and Current Liabilities
Cost of Capitol ( found on the 10K)
Cost of Equity
Combine with WACC |
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Term
| Final Step to Determine EP |
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Definition
NOPATcr
Invested Capital X WACC % as a Debit
The Difference is the Economic profit/ loss |
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Term
| Economist Definition of EP |
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Definition
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