Accounting Profit Vs.

Economic Profit
• Accounting Profit is measured as a
company 's financial performance by
subtracting explicit cost from revenue.

• Economic Profit on the other hand

consider both explicit and implicit
costs including the opportunity cost of
resources.
Accounting Profit and
Economic Profit formula :
Accounting Profit = Total
Revenue - explicit cost
Economic Profit =Total
Revenue - (Explicit cost +
Implicit cost)
Application of accounting Application of economic
profit profit

• To assess a • Business can use it to

company's determine whether ti
performance and enter or stay in a
compare it's financial particular market.
position to Economic Profit also
competitors. shows how efficiently
how company's
operating.
The use of each profit in
different Philippine Businesses
• Economic Profit aids business in
making strategic decision by
considering all relevant costs, while
accounting profit is crucial for
financial reporting and regulatory
compliance. The mentioned
companies in the Philippines likely
leverage both measure in their
financial assessment and decision
making process.
Companies that uses
Economic and Accounting
Profit
• SM Investment Corporation
(SMIC)
• Ayala Food Corporation
• Jollibee Food Corporation
• San Miguel Corporation