英语翻译Which concept--the business profit concept or the econom
英语翻译
Which concept--the business profit concept or the economic profit concept--provides the more appropriate basis for evaluating business operations?Why?
ANSWER
The economic profit concept provides the most appropriate basis for evaluating the operations of a business since it allows for a risk-adjusted normal rate of return on all capital devoted to the enterprise.Even when business profits are substantial,economic profits can sometimes be negative given the effects of risk,inflation,and other factors.Substantial business profits are no guarantee to the growth,or even maintenance,of capital investment.In actual practice,investors adjust reported accounting data to account for additional factors that must be considered.