Procyclical and Profit: Difference between pages

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In [[business cycle]] theory and finance, any economic quantity that is positively correlated with the overall state of the economy.  
1. ''Accounting''


Any quantity that tends to increase when the overall economy is growing.
A surplus arising from the appropriate matching of revenues with expenditure.
<br>For example, operating profit or net profit.




=====Bank supervision=====
The profit for a period may differ from the cash flow because of:


The performance of banks tends to be procyclical. They thrive when the economy is strong, and suffer disproportionately when the general economy is weak.
*Items in cash flow which are not part of profit. For example capital expenditure or the collection of debtors recognised in prior periods; and
*Items in profit which are not cash flows, for example depreciation, amortisation, or making accruals.


This is a problem, because it can amplify financial instability.


Basel III seeks to address the problem of the procyclicality of the largest banks' capital, by requiring them to hold countercyclical capital buffers.


2.


The opposite of procyclical is ''countercyclical''.
More generally any surplus, gain or net benefit arising.




== See also ==
== See also ==
* [[Countercyclical]]
*[[Accrual]]
* [[Cyclical]]
*[[Amortisation]]
* [[Procyclicality]]
*[[Attributable profit]]
* [[Prudential]]
*[[Break-even]]
* [[Total Loss Absorbing Capacity]]
*[[Business]]
*[[Capital expenditure]]
*[[Cash flow]]
*[[Debtors]]
*[[Depreciation]]
*[[Gross profit]]
*[[Loss]]
*[[Net profit]]
*[[Net profit margin]]
*[[Not-for-profit]]
*[[Operating profit]]
*[[Profit and Loss account]]
*[[Profit and Loss reserve]]
*[[Profit margin]]
*[[Profit maximisation]]
*[[Profit warning]]
*[[Profitability]]
*[[Recognition]]
*[[Turn]]
*[[Underlying]]
*[[Unrealised profit]]


[[Category:The_business_context]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:Manage_risks]]

Revision as of 22:33, 14 January 2020

1. Accounting

A surplus arising from the appropriate matching of revenues with expenditure.
For example, operating profit or net profit.


The profit for a period may differ from the cash flow because of:

  • Items in cash flow which are not part of profit. For example capital expenditure or the collection of debtors recognised in prior periods; and
  • Items in profit which are not cash flows, for example depreciation, amortisation, or making accruals.


2.

More generally any surplus, gain or net benefit arising.


See also

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