Why do strategy analysts care about economic profits and not just accounting profits?

Question: Why do strategy analysts care about economic profits and not just accounting profits?

  • Economic profits reflect the opportunity cost of deploying capital.
  • Economic profits calculate a firm’s profits after operating costs.
  • Economic profits are the same as accounting profits.
  • Economic profits reveal a firm’s market share.

Answers: Economic profits reflect the opportunity cost of deploying capital.

Conclusion of Why do strategy analysts care about economic profits and not just accounting profits?

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