Economic Profit



         


In accounting Economic Profit, or EP, is a single-period metric to determine the value created by a company in one year.

EP = Net Earnings - Equity Charge = (ROE - COE) * Equity

where

ROE = Return on Equity COE = Cost of Equity = Risk-free Rate + Beta * Equity Risk Premium

See also: Economic profit for the economics meaning of the term.





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