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Economic Profit: Definition and How to Calculate

By Nicholas RossolilloUpdated Feb 22, 2025 at 10:42 AM

Key Points

  • Economic profit contrasts from net income by subtracting both usual costs and missed alternative profits.
  • Short-term economic losses may lead to long-term gains if underlying business strategies enhance profitability.
  • Investors should gauge management's track record in growth and market entries rather than focusing solely on economic profit.

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