chapter  4
The financial performance of U.S. Nonfinancial Corporate Business 1945-1990 - II. Financial policy and fiscal implications of cash flow-accruals relationships
Pages 34

This last possibility can be described more generally. Assume that a firm's entity profit, i.e., pre-tax profit (before interest), HCPj*, in year j is given by:

HCPj* = Fj + tj + Dj + REj (24) where, in year j,

Fj = interest expense;

tj = tax expense; Dj = dividends paid; and, REj = retained earnings.