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The Critical Analysis of Profit for its Allocation Decision-Making

Author

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  • Renáta PakÅ¡iová

Abstract

The decrease of the business property can cause a reduction in the production ability of the enterprise to the extent causing an involuntary closing of business activities. It is usually caused not only by the reported loss, but also by the greater distribution of profits, as is the amount of the real level of the enterprise's distributable profit. A thorough analysis of the reported accounting profit described in this paper should be the starting point for the allocation of profit. It is important to be able to identify and assign a portion of the accounting profit, corresponding to the non-realised profit and fictitious profit, where eventual release outside the enterprise threatens the future performance of the enterprise. These portions of the reported profit do not correspond to the actually made, realised and real production, which is a necessary condition to achieve a real profit to possible safety division to investors. JEL Codes - D24; G32; M11; M40

Suggested Citation

  • Renáta PakÅ¡iová, 2017. "The Critical Analysis of Profit for its Allocation Decision-Making," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 64(si), pages 41-56, December.
    • Handle: RePEc:aic:saebjn:v:64:y:2017:i:si:p:41-56:n:106
    DOI: 10.1515/saeb-2017-0039
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    More about this item

    Keywords

    analysis of profit; production ability; profit allocation; decision-making;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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