ABSTRACT
Business profit is brought about through various causes. The turnover is influenced by: the existing competition and the turn of the economic cycle; the development of the purchasing power of money; managerial ability; the skill and efficiency of the staff; the location in the economic area; the dangers and encouragements of the surroundings, which may be summarized by the terms ‘opportunity’ and ‘risk’; several other factors. A computation of profit— profit being defined as an increase (loss equals decrease) in terms of figures, over a figure established at an earlier date—can be based only on those data from amongst these many causes, as can be expressed in quantity. The above definition implies, first, that only some of the causes can be expressed in a figure of increase, because only data expressed in terms of quantity permit establishing a difference ; and secondly, the figures for the two amounts, on the basis of which the difference is computed, must be arrived at by the same formal method, so as to avoid comparing what is not comparable. There are, therefore, several ways of computing profit, of a business dependent on the number of profit causes taken into account, and on the manner in which the figures are determined.
