Net income

Possible numerators include the gross income net pretax income net after-tax income gross profit, ie, gross income minus book depreciation cash flow or net income. An average return value is selected by defining a typical or mature proof year as the basis of calculation. The denominator can be the original total investment, depreciated book-value investment, lifetime averaged investment, or fixed capital investment. 

Mfg cost (less depr and int) Capitalized fixed capital Capitalized total capital Operating income Interest on debt Depreciation (Tax basis) Net taxable income Federal income tax Investment tax credit Net income Cash flow... 

Percentage depletion for most minerals is limited to a percentage of the taxable income from the property receiving the depletion allowance. For certain oil and gas producers the percentage depletion can be limited to a percentage of the taxpayer s net income from all sources. 

The cash taxes due are calculated by multiplying the book net income before tax, times the tax rate, then adjusting for deferred tax and tax credits, if any. 

The net income before federal income tax (FIT) is calculated by subtracting all of the deductions from the gross revenues. If there is a net loss for any year, it can be carried forward and deducted the next year from the net income before FIT. If not all of the loss carried forward can be used in the following year, it can be carried forward for a total of seven years. 

After federal, state and city taxes are paid, the remaining income is called net income, i.e.. 

Annual net income (or profit) = Annual gross income — Annual taxes (III.7)... 

Far above Leblanc, at the very pinnacle of French science, stood Antoine Laurent Lavoisier, a government financier and reformer and the father of modern chemistry. Lavoisier was a fabulously rich tax collector. His net income hovered in modern terms somewhere between 2.4 million and 4.8 million a year, and he dedicated much of it to his scientific library and chemical laboratory. 

In 1973 the companies specializing in the production of industrial chemicals and synthetic materials needed to raise about 6,000,000,000. It was expected that about 80% of that would be obtained from net income and depreciation charges. About 10% would be borrowed and the remaining 10%would come from the other categories.19... 

In Chapter 3 we discussed the formulation of objective functions without going into much detail about how the terms in an objective function are obtained in practice. The purpose of this appendix is to provide some brief information that can be used to obtain the coefficients in objective functions in economic optimization problems. Various methods and sources of information are outlined that help establish values for the revenues and costs involved in practical problems in design and operations. After we describe ways of estimating capital costs, operating costs, and revenues, we look at the matter of project evaluation and discuss the many contributions that make up the net income from a project, including interest, depreciation, and taxes. Cash flow is distinguished from income. Finally, some examples illustrate the application of the basic principles. 

Net income (4) Basis for earnings per share calculation/net operating profit after taxes... 

Lianos (1979) provides an accessible insight into how the multiplier can be located in the reproduction schema. By focusing specifically upon Department 1 he states, it is convenient to assume a one sector economy (ibid. 407). Only information from Department 1 of the example used by Marx (Table 2.2) is included in the Lianos reproduction schema, as shown in Table 2.3. The key modification which enables a translation to Keynesian economic categories is to interpret all value added, variable capital plus surplus value, as net income (T,) for Department 1. Assuming away for the moment the problems associated with Adam Smith s dogma, this income is net of constant capital. The net income of the one-good economy is 2,000, consisting of 1,000 units of variable capital and 1,000 units of surplus value. 

An analytical leap can now be made that provides the cornerstone of the rest of this book. Located in this reproduction schema is a Keynesian multiplier that enables a relationship to be specified between net investment and net income. The intuition runs as follows. Capitalists anticipate that they will expand their constant capital by 500 in the next period of production. There is therefore a net investment demand for 500 emits of output to be produced in the current period.6 Workers are hired to produce this... 

The main problem with this decomposition of the multiplier is that it is restricted to a one-good model. A contribution which relates the Keynesian multiplier to a two-good model, along the lines of Marx s reproduction schema, has been provided by Hartwig (2004). As a starting point, net income in the two departments is captured by the identities... 

Following the approach taken by Keynes (1936) in parts of his General Theory, the propensity to consume b is applied to total net income, y V, i V2 i. S, i S2, such that the amounts demanded /)( ) for the ... 

This demonstrates that the scalar Keynesian multiplier relationship can in principle be derived from a two-sector model. As it stands, however, since (2.14) is defined using net income, no account is taken of the constituent role of constant capital in the production process.9 In embracing Keynes to model aggregate demand, a Marxian response is required to the charge that the scalar multiplier falls prey to Smith s dogma. 

Under Marx s assumption, in Capital, volume 2, that prices and values are identical, and hence 1 of output is equal to an hour of labour time, this equation captures both an income and multiplier relationship. The equivalence between prices and values is embodied in the identity p = v such that the total employment of labour units (vQ) is equal to total money net income (pQ). Similarly, vF the total number of labour emits required to produce final demand, is equal to total money final demand (pF). Hence, the expression 1/1 — vh is an income/employment multiplier, in which the scalar vh represents the propensity to consume b, derived from the two-department schema.10 We shall refer to this as the Keyensian scalar multiplier, since although it is somewhat unusually defined according to worker consumption it retains the l/l h structure that is so common to economics textbooks. The simplicity of the Keynesian multiplier is retained in a two-department setting. 

Year Constant capital Variable capital Profits Net income dy/y / dl/I... 

Using the analytical framework developed by Samuelson and Wolfson (1986 69-70), the Bauer-Grossmann model, considered in Chapter 7, can be represented by a series of simple equations.1 The first relationship to be specified is that between net income (v,) and variable capital (Vt), where i represents a time subscript. Income consists of variable capital plus surplus value extracted at the rate s ... 

Zero worker savings will be assumed throughout the rest of this book, for reasons of simplicity. Hence, B is no longer a proxy for worker consumption, as assumed by De Angelis, but is precisely worker consumption. The propensity to consume b is now precisely the ratio of worker consumption to net income. 

Hence, vh = v2h2 = v2B2/L, where B2 is total consumption of good 2, and L is total employment. Since v2 = p2 and L = vQ = pQ = y, where y is total net money income, it follows that vh = p2B2 y = b, the ratio of total money consumption by workers to total net income (the propensity to consume). 

The ACH process has recently been improved, as stated by Mitsubishi Gas. Acetone-cyanohydrin is first hydrolized to 2-hydroxyisobutylamide with an Mn02 catalyst the amide is then reacted with methylformiate to produce the methyl ester of 2-hydroxyisobutyric acid, with coproduction of formamide (this reaction is catalyzed by Na methoxide). The ester is finally dehydrated with an Na-Y zeolite to methylmethacrylate. Formamide is converted to cyanhydric acid, which is used to produce acetone-cyanohydrin by reaction with acetone. The process is very elegant, since it avoids the coproduction of ammonium bisulphate, and there is no net income of HCN. Problems may derive from the many synthetic steps involved, and from the high energy consumption. 

To the remaining companies, we applied Merrill Lynch s Cash Realization Test. We eliminated companies that reported financial net income that materially exceeded cash flow from operations. Companies eliminated 7 — Companies remaining 62... 

This test determines the ratio of average S P Core Earnings to average reported net income for years 1997-2002 for each of the 189 companies entering this screen. A low Core Earnings to net income ratio implies that a company produced material earnings from noncore operating activities. 

Becanse both core earnings (CE) and net income (NI) can be negative, the following decision rnles were employed to adjust for problems that could arise ... 

We obtained CFFO and net income (NI) for each of the respective companies for the period 1997-2002 from Compustat. We computed CFFO/NI for each of the six years and averaged the ratios for each company over the six-year period, resulting in an overall average ratio of CFFO/NI for each company. 

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