Why Is It Problematic to Compare the Income Inequality Ratio

question 105

Essay

Why is it problematic to compare the income inequality ratio over a lengthy period of time but more valid to make such a comparison over a shorter period of time?

---

Definitions:

Retained Earnings

The portion of a company's profits that is kept or retained within the company instead of being paid out to shareholders as dividends, often used for investment or to pay off debt.

IRR

Internal Rate of Return; a financial measurement tool utilized to assess the potential profit of investment opportunities.

WACC

Weighted Average Cost of Capital, a calculation that reflects the average rate of return a company is expected to pay to all its security holders.

After-Tax Value

The value of a transaction or investment after all taxes have been deducted.