What is Economic Profit?
In this glossary, Economic Profit refers to: The residual profit after subtracting the cost of capital from net operating profit after taxes (NOPAT); used to measure value creation beyond accounting profit, as in Economic Value Added (EVA) frameworks.
How is Economic Profit used in finance?
In finance communication, this term appears in contexts such as: "A positive economic profit indicates the firm generated returns in excess of its cost of capital, creating shareholder value."
Why does Economic Profit matter in finance?
Economic Profit matters because it supports clear communication in Analysis contexts for Financial Analysts, Bankers, and Traders. It also connects to aviation training and exam language such as CFA, ACCA, and FRM.
Who uses Economic Profit?
Economic Profit is mainly used by Financial Analysts, Bankers, and Traders.
What category does Economic Profit belong to?
In this glossary, Economic Profit is grouped under Analysis. Related pages in this category explain adjacent procedures, commands and operational concepts.
Where does this definition come from?
This definition is sourced from CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework and published by Protermify Finance as a static finance reference page.
