Corporate Size and Earning Power

Corporate Size and Earning Power

Corporate Size and Earning Power

Corporate Size and Earning Power

Excerpt

The analysis reported in the following chapters centers about one basic question: To what extent is corporate earning power related to the size of corporate enterprise? That various aspects of this question and various other questions more or less closely connected therewith should receive attention in the course of the analysis must be taken for granted. That any relations or apparent relations found in examining the basic question need to be subjected to critical analyses somewhat disconnected from the general outline of study is also evident. But always the basic question is kept in mind: Are variations in profit rates associated with variations in size?

The entire study is concerned with the corporate entity. This means not only that non-corporate types of business are ignored, and that the findings of the study do not necessarily reach to such types. It means also that the unit of size under consideration is the entire enterprise operated by a single corporation, and not a single plant or other operating unit; although in many cases the business of a particular corporation may in fact be limited to a single plant. Likewise the concept of profit, or rate of return, is one pertinent to the whole enterprise of a corporate legal entity, and not to a plant or process or operation having unity in a technological sense. In other words, the concepts of size and of profit are not those in mind when an economist examines the relation between profits and the scale of operations.

Without doubt some of the findings of the present study are influenced by, and reflect in some degree, existing relationships between profits and scale of operations. This should follow . . .

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