Some Analysts Prefer to Evaluate Firms on the Basis of Operating

question 45

Essay

Some analysts prefer to evaluate firms on the basis of operating income,but other analysts prefer net income.Which do you believe is more appropriate and why do you believe that?

---

Definitions:

Preservation

The act of maintaining or safeguarding something in its original or current state to prevent decay or destruction.

Efficient Outcome

A situation where resources are allocated in the most effective manner, leaving no room for improvement without making someone worse off.

Marginal Social Benefit

The additional benefit to society from consuming one more unit of a good or service.

Nonrival Good

Good for which the marginal cost of its provision to an additional consumer is zero.