Florence M. Clark

Ralph C. Epstein

English

Research Papers in Economics

This PDF is a selection from an out-of-print volume from the National
Bureau of Economic Research
Volume Title: Industrial Profits in the United States
Volume Author/Editor: Ralph C. Epstein assisted by Florence M. Clark
Volume Publisher: NBER
Volume ISBN: 0-87014-025-6
Volume URL: http://www.nber.org/books/epst34-1
Publication Date: 1934
Chapter Title: Glossary
Chapter Author: Ralph C. Epstein, Florence M. Clark
Chapter URL: http://www.nber.org/chapters/c5045
Chapter pages in book: (p. 595 - 598)GLOSSARY
THE principal technical terms employed in this volume are briefly
defined below. The listisnot complete, but will be helpful to
readers who do not examine carefully thefirst few chapters of
Books I, II and III. Ch. 1 and 47 employ several of the terms jfl:
their general economic and accounting senses; but the other chapters
use them in their technical senses chiefly. For further definitions the
reader is referred both to the several chapters of this volume and to
pages 2—3 of the Source-Book for the Study of Industrial Profits, by
R. C. Epstein in collaboration with F. M. Clark (Washington,
Department of Commerce, 1932).
INCOME ACCOUNT ITEMS
Income, net income or total net income. The net earnings of a corpo-
ration after payment of all business expenses and fixed charges
including interest on funded debt, but unless otherwise specified,
before the payment of Federal income taxes. If the amount of
funded debt is small, as is the case with most of the corporations
and industries treated, then net income is not very different from
profit or total profit as defined immediately below.
Profit or total profit. Net income plus interest payments on funded
debt, estimated as explained in Appendix A. In Chapter 1 net in-
come and profit are used synonymously, since in all instances there
the two figures virtually coincide.
Earnings. A general term used to signify either net income or total
profits, when the two terms are practically the same in amount.
BALANCE SHEET ITEMS
Capitalization. The invested capital of a corporation as measured by
the sum of its preferred stock, common stock, surplus and undi-
vided profits. Special reserves are in most instances excluded. For
[595][596] INDUSTRIALPROFITS
qualifications as to the time of the year for which the figure is
taken, and for other discussion, see Ch. 45 and 46.
Total capital. Capitalization plus funded debt.
Investment or invested capital. A general term used to signify either
total capital or capitalization when the two terms are virtually the
same in amount.
RATIOS
Earnings rate. The percentage of net income to capitalization; or,
where the two ratios are not very different, either that percentage
or the percentage of total profit to total capital. a distinction
between the two is necessary, the context makes clear which mean-
ing is intended.
Earnings rate, or return, on sales. The percentage of net income for
the year to the dollar volume of output or merchandise stock dis-
posed of during the year. The figure for dollar volume of business
is after sales returns and allowances, but before the deduction of
cost of goods sold or of any other element of business expense.
Capital turnover. The item of sales divided by total capital; or, when
total capital and capitalization are not very different in amount,
by capitalization.
STATISTICAL EXPRESSIONS
Series. A succession of figures for the same item, relating to different
years, corporations or industries; e.g., a set of income data for 71
manufacturing corporations for each of the thirteen years, 1919
through 1931.
Sample. A set of data representing some field, say, Food Products
manufacture, but comprising only a partof the entirefield;
e.g., the income and capitalization data for 215 food manufactur-
ing companies, which amount to only a part of the total income
and capitalization of all food manufacturing enterprises in the
United States.
Universe. The complete field which sample data only represent,
i.e., in the illustration just given, the aggregate income and capi-
talization of all food manufacturing companies.
Array. A series of data arranged in order of magnitude; e.g., a listGLOSSARY [597]
of215 food companies ranked according to the size of their capi-
talizations, from the smallest to the largest.
Median. The central or middle figure of an array; e.g., in the illus-
tration above, the 108th food company counting from either the
top or bottom of the list.
Upper or lower quartile. The figure standing, not in the center or
middle of an array, but exactly one-f ourth of the distance from
the top or the bottom.

Industrial Profits in the United States

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