The Usefulness of Alternative Measures of Profit

The purpose of the report below is to evaluate the relative usefulness of alternative profit (or revenue) indicators for equity investors and to evaluate the potential contribution of key valuation models. Analysis includes a theoretical research section that includes a combination of stock valuation techniques and alternative profit indicators. There are also practical sections to explain the potential differences of information NASDAQ's various profit indicators convey to investors.

Functional value is defined as the ability to replace functionality, profitability, or physical performance. Another option is to gain functional value through Utilitarianism or beneficial and material attitudes. The function value measures the profile of the selected attribute. In general, assume that functional value is the main driving force for consumer choice. This hypothesis comes from Marshall (1890) and Stigler (1950), strictly expressed in the word "rational economic person". Reliability, durability, and price are characteristics derived from the functional value of alternative means. For example, the decision to buy food at a fine restaurant must be based on their income and purchasing power.

The measure of inequality calculated by MITTS and its associated social welfare function is based on some measure of income (using the equivalent scale of adults and alternative income unit as described above). In behavioral models, it may be prudent to consider changes in personal leisure caused by tax changes. This suggests the use of "monetary scale welfare measures" rather than just a profit indicator. Likewise, it is useful to be able to compute standardized measures of change in welfare and marginal excess burden (including changes in equality and rewards) for selected individuals and household types.

Since 1979, the Census Bureau has used various expanded income definitions and alternatives to explain inflation and has published various experimental poverty indicators. These alternatives often show a lower level of poverty than the public measures of any year, but the rate of change in poverty rates of various measures is very similar. This similarity suggests that despite criticism, official poverty indicators provide reliable indicators of changes in annual poverty rates.