ABSTRACT
The Sandi lands philosophy At an early paragraph in its Report the Sandilands Committee defines a company's profi: by adapting the well-known Hicks definition of an individual's income [Hicks, 1946, p, 172]. The adaptation reads: 'A company's profit for the year is the maximum value which the company can distribute during the year, and still expect to be as well off at the end of the year as it was at the beginning' [Inflation Accounting, 1975, paragraph 98]. For a company, continues the Report, the same degree of well-offness means maintaining its capital intact. If we were granted perfect knowledge of the future, the quantification of this capital would be fairly clear. It would be the discounted net present value of all future net cash flows arising for the company [paragraph 100]. The Report gives examples that indicate that cash flows here mean cash flows distributable to the shareholders [paragraphs 101 and 102].
