Subject category:
Finance, Accounting and Control
Published by:
Darden Business Publishing
Version: 19 June 2009
Revision date: 11-Jul-2011
Length: 12 pages
Data source: Field research
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Abstract
Lipton has about 50 branded product lines, each of which has a product-line income statement. For many years, the company had used trading profit as a key measure of performance. In recent years, however, other measures have been used, and now a radically different product-line P&L (profit and loss) has been proposed. The new 'economic profit' is computed by using a capital charge on assets and inflation-adjusted depreciation. The product-line managers are confused and upset. See also 'Thomas J Lipton, Incorporated (A)' and 'Thomas J Lipton, Inc (B)'.
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Abstract
Lipton has about 50 branded product lines, each of which has a product-line income statement. For many years, the company had used trading profit as a key measure of performance. In recent years, however, other measures have been used, and now a radically different product-line P&L (profit and loss) has been proposed. The new 'economic profit' is computed by using a capital charge on assets and inflation-adjusted depreciation. The product-line managers are confused and upset. See also 'Thomas J Lipton, Incorporated (A)' and 'Thomas J Lipton, Inc (B)'.
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