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Economic benefits

Economic Concept

Economic benefits are economics The concept of. stay economics Dominant Economics Income refers to the maximum amount that he may consume when he is as rich as at the end of the period and the beginning of the period, including realized income and unrealized income profit 。

Chinese name: Economic benefits
Foreign name: Economic Income

Interpretation: enterprise To be truly profitable, we need to make up for it capital cost
Advantages: than Accounting income Closer real benefits

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definition

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Economic benefits refer to enterprise To be truly profitable profit Not only to make up for the Operating costs And make up for it capital cost 。 Economic income is obtained by comparing the ending and beginning of an accounting period Net assets (i.e Owner's equity ）Calculated.

One enterprise The definition of economic return of assets The maximum amount that can be allocated to shareholders amount of money ”。 Economic benefits and Accounting income The meaning of is different. calculation Accounting income And economic benefits. Because wealth can be used in the future cash flow The economic income can also be defined as the present value of the expected future cash flow generated to the owner from one period to another period minus the owner's Net investment Difference after.

Calculation formula

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Economic income=present value of expected future cash inflow- Net investment The present value of. The economic benefit is due to Production and operation Training staff and improving work efficiency Waiting for envoy enterprise Increased value.

Economic benefits and Market added value There are differences. The measurement of economic returns does not depend on the stock price, but on cash flow Estimated. Only if there is no change in the expected future performance and the weighted average capital cost Under the condition of constant throughout the year, Market added value Is equal to Economic profit 。

Advantages and limitations

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advantage

Economic income ratio Accounting income Closer real benefits , better reflect the objective reality; Economic benefits and economics The concept is consistent and easy to understand by managers and investors.

limitations

enterprise The future of cash flow Determination of quantity and time of, Discount rate The determination of economic returns is difficult and not easy to be accurate. Therefore, in practice, the measurement of economic returns is imprecise and difficult to verify.

Difference between the two

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Economic benefits

enterprise stay Production and operation In the process, keep the Actual production capacity I.e original capital The value remains unchanged, and the part that exceeds the actual production capacity invested by the owner is formed economics "Revenue". Measurement and assets Is closely related to the pricing of enterprise Within a certain period Net assets The difference of present value reflects the enterprise's Actual income 。 In theory, this understanding is rigorous and convincing in logical reasoning, and can reflect comprehensively assets The true condition of the income.

However, "economic income" belongs to the qualitative category of income, and the operability of income recognition and measurement in practice is not easy to solve. because capital Owner invested original Capital（ assets ）At the end of the period Owner's equity Capital（ Net assets ）The measurement of value is based on the discount of expected future cash flow. In other words, the income is original investment capital And closing owner Equity The difference between the discounted value of the future cash flow brought by the capital, which has uncertain factors (cash flow and Discount rate And people's understanding of the future matter Estimates vary.

Hong Kong Disneyland Creates HK $148 Billion Economic Return

In this sense, U.S.A Scholars Edwards and Bell called economic returns "subjective returns". Meaning economics Although the income on is more real, at this stage, people's measurement methods and computing ability are limited and cannot meet the practical needs, so it can only be theoretically feasible. Nevertheless, over the years, people have been assiduously searching for the recognition and measurement methods of economic benefits, taking whether it is close to economic benefits as the criterion to measure the true recognition of benefits.

Accounting income

Accounting income Accounting is based on four assumptions (accounting subject , accounting period, duration management 、 currency Based on the accrual basis and the principle of matching revenue and cost enterprise Actual amount in a certain accounting period Economic transactions Results. Its characteristics are "trinity", namely, the principle of historical cost, the principle of realization matching and the principle of prudence. be relative to economics In terms of income theory, Accounting income The advantages of the application of the software are obvious, and it is more objective and verifiable.

Therefore, Accounting income It is widely accepted. The results of empirical research also fully prove this point. In 1968, U.S.A Bauer and Brown of Accounting income With information content; In 1989, Liv proved again that the change of income and price of stock There is a positive correlation between changes. Accounting income The emergence and development of enterprise The demand for income information, with the deepening of the measurement, recognition and analysis of accounting income, people are deepening their understanding of income, and at the same time, they also recognize the defects of accounting income from another perspective.

difference

Since the 1970s, great changes have taken place in the world economy. Financial market integration 、 capital Flow globalization enterprise management Due to the complexity and diversity of activities, it is very important for enterprises to obtain income information in time Accounting income theory Limited to enterprise The "post event" report of realized income in an accounting period lags behind Economic matters The actual time of occurrence, in addition, the accounting benefits concept There are still more new challenges. It is mainly manifested in:

First of all, the western countries inflation , which has seriously affected the reliability and authenticity of historical cost and benefit.

and Accounting income Is based on actual transactions and historical cost Valuation method: for those changes in value due to changes in price or forecast, as long as there is no actual transaction, the income will not be recognized and measured. This leads to enterprise The production cost cannot be fully compensated Revenue cost The measurement attributes of.

Secondly, the rise and rapid development of financial derivatives are not conducive to the management Performance evaluation and Asset risk The historical cost model cannot reflect the essential attributes of assets.

Economic benefits

Again, enterprise management The increasingly diverse and complex activities and the ever-changing high-tech make the enterprise's Know how 、 monopoly trademark 、 goodwill Etc assets The recognition and measurement of the "three in one" principle cannot be recorded. Moreover, although Accounting income The principle of prudence is emphasized, but the calculation of accounting income still has some subjective operation space. When the integrity consciousness of the whole society needs to be strengthened, people manipulate profit It is not uncommon to see such incidents. Various practical drawbacks force people to re-examine Accounting income Theory.

Development history

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Classical economist Adam Smith in his masterpiece On the Wealth of Nations First defined the income as "increase of wealth" and "no erosion of wealth" capital The amount that can be consumed ". britain Classical economist Marshall introduced the income concept of "increasing wealth" in his Principles of Economics enterprise And propose "value-added income".

Famous in Britain economics J. R. Hicks believes that "income is the maximum amount that a person may consume on the premise of maintaining the same wealth at the end of the period and the beginning of the period." Hicks' income concept is based on Capital preservation Has been widely recognized in modern western countries economics In theory, and Accounting income Theory has a great influence. It is generally believed that the economic benefits Capital preservation Based on the principle of eliminating additional investment and profit Distribution, etc enterprise After dealing with investors, Net assets Increase of.

Accounting income The recognition concept of "is the difference between the output value and the input value, which follows a series of Accounting Assumptions and accounting principles On the basis of analyzing the transactions that have occurred in the current period, the realized income and corresponding costs of the current period are recognized and measured respectively cost The difference after the income and expense are matched is the accounting income.

Economic benefits and Accounting income Difference of:

1. Economic benefits can be more accurately reflected enterprise The essence of income - the increase of wealth; Accounting income More rely on artificially designed recognition and measurement models, including many selection, analysis, judgment and estimation procedures, pay more attention to form and name, and emphasize compliance with specific accounting standards.

2. Economic benefits include not only realized benefits, but also unrealized benefits, which can be fully reflected enterprise The full picture of income information; Accounting income More emphasis management Activities, emphasizing the concepts of realization, accrual, matching, history, etc., and not recognizing unrealized gains.

3. More emphasis on economic benefits Capital preservation The original capital (initial capital) must be preserved. After the cost is fully compensated, the part exceeding the initial capital can be recognized as income; stay inflation In serious cases, Accounting income Although financial capital can be preserved, it can not reflect the preservation of physical capital.

4. The economic income is measured according to the "ending Net assets The mode of "net assets at the beginning of the first period" only works with assets 、 liabilities Is related to the measurement attribute of, and there will be no difference due to different accounting modes; Accounting income The measurement of is based on the "revenue expense" model, which varies according to the different accounting methods and procedures.

5. The measurement results of economic income are subordinate to those at the beginning and end of the period assets 、 liabilities Pricing: once the pricing method is determined, there is little room for manual selection and judgment; Accounting income There are a lot of uncertain factors in the process of recognition and measurement, and many places need to be estimated and judged, so that the accounting income inevitably has subjective elements, and the elasticity of adjustment is large.

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The recognition and measurement of profit and loss during the accounting period should analyze the transactions actually occurred during the period, recognize and measure various incomes and expenses, and according to the accounting equation "income expense"= profit ”To calculate. The recognition and measurement of revenue and expenses must follow the revenue realization principle, accrual principle, historical cost principle, matching principle, revenue expenditure and capital Principles of sexual expenditure, etc. about assets or liabilities The fluctuation of value shall not be recognized without objective facts. Accounting income only recognizes realized income, not unrealized income.

According to the economic income view, the recognition and measurement of profit and loss during the period should compare the Net assets , after deducting the additional investment of investors, add back the distribution to investors profit Then it is the gain/loss of the period. If at the end of the period and the beginning of the period Net assets equal, capital Be preserved; If the net assets at the end of the period are less than those at the beginning of the period, the capital is not preserved, and the difference is capital deficit; If the net assets at the end of the period are greater than those at the beginning of the period, capital It is not only preserved, but also generates surplus. The difference is profit 。 People press capital Different measurement attributes will Capital preservation Divided into financial capital maintenance and Physical Capital Maintenance 。 The former emphasizes the name Monetary capital And the latter emphasizes enterprise Preservation of actual production and operation capacity. stay Capital preservation In view of this, the recognition and measurement of profit and loss may also include unrealized gains, such as accepted donation , revaluation appreciation Foreign currency Translation difference, etc.

According to Adam Smith wealth Addition theory economics Value added concept in, enterprise The income should be the increase of wealth, which not only includes the victory paid to shareholders and Retained earnings , including payment to staff Salary of Taxes (excluding VAT), external donation Etc. According to this concept, the economic income can be based on "income depreciation purchased goods or labour services Cost of=current period Value added ”Equation calculation of enterprise management Should not be pursued singly profit Instead, we should seek the interests of all stakeholders involved in enterprise activities and increase the wealth of enterprises. The beneficiaries of wealth appreciation are not only shareholders and management, but also general staff 、 lender 、 government sector Other stakeholders such as the public.

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