the global firm’s profit
DESCRIPTION
The global firm’s profit. We have the two equations : R' = C' + I' flow (1) 100 = 60 + 40 R' = C + S m reflux (2) 100 = 80 + 20 So the global firm’s profit : = C – C' = I' - S m = 20 (3) et (4). The global firm’s accounts. Desagregation of global firm in two sectors. - PowerPoint PPT PresentationTRANSCRIPT
The global firm’s profit
We have the two equations :R' = C' + I' flow (1)100 = 60 + 40R' = C + Sm reflux (2)100 = 80 + 20So the global firm’s profit :
= C – C' = I' - Sm = 20 (3) et (4)
The global firm’s accountsLoss and profit account (income statement)
expenses revenues salaries profit
R' = C' + I' = 100 = C - C' = 20
sales production for one self
C = 80
I' = 40
total C + I' = 120 total C + I' = 120
Balance-sheet assets liabilities
investment I' = 40
debets profit
Sm = 20 20
total I'= 40 total 40
Desagregation of global firm in two sectors
households
E1
I’2 =30E2
I’1 = 10
I1 = 20
I' = 40C' = 60
C = 80
E2 accounts E1 accounts
c o m p t e d e r é s u l t a t c h a r g e s p r o d u i t s s a l a i r e s p r o f i t I ' = 4 0 Q 1 = I 2 - I ' 2 = 3 0 v e n t e s p r o d u c t i o n i m m o b i l i s é e I 2 = = 6 0 I ' 1 = 1 0 t o t a l I ' 1 + I 2 = 7 0 t o t a l I ' 1 + I 2 = 7 0
Income statement expenses revenues
salaries profit
I' = 40 Q2 = I1 - I'1 = 10
sales production for one self
I1 = 20 I'1 = 30
total 50 total 50
income statement expenses revenues
salaries profit
C' = 60 Q2 = C – C' = 20
sales
C = 80
total C = 80 total C = 80
balance-sheet assets liabilities
investment
I'2 = 30
debts profit
20 10
total 30 total 30
balance-sheet
assets liabilities
investment I1 = 20 profit 20
total 20 total 20
Accounts in income-value of the two sectorsE2 accounts do not change, since its investment does not come
from a purchase and was already counted in income- value.E2 accounts :
v a r i a t i o n d u b i l a n v a r . d e l ' a c t i f v a r . d u p a s s i f I m m o b i l i s a t i o n s P e r t e I ' 2 = 3 0 1 0 d e t t e s 4 0 t o t a l 4 0 t o t a l 4 0 v a r i a t i o n d u b i l a n v a r . d e l ' a c t i f v a r . d u p a s s i f I m m o b i l i s a t i o n s P e r t e I ' 2 = 3 0 1 0 d e t t e s 4 0 t o t a l 4 0 t o t a l 4 0 v a r i a t i o n d u b i l a n v a r . d e l ' a c t i f v a r . d u p a s s i f I m m o b i l i s a t i o n s P e r t e I ' 2 = 3 0 1 0 d e t t e s 4 0 t o t a l 4 0 t o t a l 4 0 v a r i a t i o n d u b i l a n v a r . d e l ' a c t i f v a r . d u p a s s i f I m m o b i l i s a t i o n s P e r t e I ' 2 = 3 0 1 0 d e t t e s 4 0 t o t a l 4 0 t o t a l 4 0
v a r i a t i o n d u b i l a n v a r . d e l ' a c t i f v a r . d u p a s s i f I m m o bi l i s a t i o n s P e r t e I ' 2 = 3 0 1 0 de t t e s 4 0 t o t a l 4 0 to t a l 4 0
balance-sheet assets liabilities investment I'1 = 10 profit 10 total 10 total 10
Income statement expenses revenues
salaries value transfer profit
C' = 60 I1 - I'1 = 10 10
sales C = 80
total 80 total 80
Input-output table in prices
Intermediate consumptionCons. I S
A B C
A 30 30 60
B 15 30 5 50
C 40 40
VA 45 20 40 60 40 5
60 50 40 150
Input-output table in income-value
Intermediate consumptionCons. I S
A B C
A 17.06 17.06 34.12
B 14.12 28.24 4.71 47.07
C 20 20
R’ 20 30 20 45..30 20 4.71
34.12 47.06 20 101.19
Accounting in pricesFirm A
Firm B
balance-sheet cash account assets liabilities
in out
investment cash
1015
profit 25 sales 60 monetary income
20
investment 10 purchases 15 cash 15 total 25 total 25 total 60 total 60
Income statement expenses revenues
monetary income purchases profit
20 15 25
sales
60
total 60 total 60
balance-sheet cash account assets liabilities in out
stock investment
5 10
debt 25 sales 45 monetary income
30
deficit 10 deficit 25 investment 10 purchases 30 total 25 total 25 total 70 total 70
income statement expenses revenues
monetary income purchases
30 30
stocks sales deficit
5 45 10
total 60 total 60
Firm C
Total profit = profit A + profit B + profit C 35 = 25 + (-10) + 20
Total cash = cash A + cash B + cash C -10 = 15 + (-25) + 0
balance-sheet cash account assets liabilities in out
investment 20 profit 20 sales 20 monetary income
20
total 20 total 20 total 20 total 20
income statement expenses revenues
monetary income profit
20 20
Production for oneself Sales
20 20
total 40 total 40
Accounting in income-valueFirm A
Firm B
income statement expenses revenues
monetary income purchases transfer of value profit
20 15 5 20
sales
60
total 60 total 60
balance-sheet assets liabilities
investment cash
5 15
profit 20
total 20 total 20
balance-sheet assets liabilities
stock investment
4.71 5
debt 25
deficit 15.29 total 25 total 25
income statement expenses revenues
monetary income purchases transfer of value
30 30 5
stocks sales deficit
4.71 45 15.29
total 65 total 65
Firm C
Total profit = profit A + profit B + profit C 14.71 = 20 + (-15.29) + 10
Total cash = cash A + cash B + cash C -10 = 15 + (-25) + 0
balance-sheet assets liabilities
investment 10 profit 10 total 10 total 10
income statement expenses revenues
monetary income profit
10 20
Production for oneself Sales
10 20
total 40 total 40
R’ = C’ + I’ + S’70 = 45.30 + 20 + 4.71
R’ = C + SH
70 = 60 + 10
’ = C – C’ = 60 – 45.30 = 14.70’ = I’ + S’ – SH = 24.71 – 10 = 14.71
Grouping A + BAccounting accounts
Accounting in income valuebalance-sheet
assets liabilities stock investment
4.71 5
debt 25
deficit 15.29 total 25 total 25
balance-sheet assets liabilities
investment stocks
205
debt profit
10 15
total 25 total 25
income statement expenses revenues
monetary income profit
50 15
stocks sales
5 60
total 65 total 65
income statement
expenses revenues
monetary incometransfer of valueprofit
5010 4.71
stockssales
4.7160
total 64.71 total 64.71
The Formation of Profit
accounting profit profit in income valuelost on IC earned on I lost on invest '
A 30 -17.06 12.94 30 -17.06 12.94 0.88 25 5 20B 30 - 28.24 1.76 15 -14.12 0.88 12.94 5 - 4.7 0.3 -10 5 -15.3C 20 20 10 10
14.7 13.82 13.82 20 0.3 35 20 14.7
C-C' earned on IC S - S'
, that is revenues minus monetary incomes minus purchase of intermediate consumption.That can be written: , that is revenues minus onetary incomes minus purchase of intermediate consumption.That can be written:
The goal is to show that profit, as it is calculated by the accountants is (in a closed economy):
= (C
- C
') + (IC - IC')u - (tIC - tIC')u + ( I - I ')u + ( S
- S
')
In which the 2nd term is the gain made by each industry when selling intermediate consumption goods, the 3rd one loss when by buying these same goods, the fourth the gain earned when selling fixed capital, and the last one results from the evaluation of
stocks at the end of the year. tu being the horizontal unity-vector (1……1)
By definition the retained profit is t = t
- tVA
' - tu IC, that is revenues
minus monetary incomes minus purchase of intermediate consumption.
That can be written:
=
- VA
' - tIC u
Using the I.O.T. in income-value we have:
tVA
' = t
' - tu IC’ or VA
' = t
' - tIC’ u
so =
-
' – (tIC u - tIC’ u )
When we develop
-
' using respectively I.O.T in prices and values we get:
= (C
- C
') + (IC – IC’) u + ( I - I ')u + ( S
- S
') – (tIC u - tIC’ u )
q.o.d.