ECONOMIC PROFIT

 Is The Difference Between Total Revenue And Economic Cost

 Economic Cost = Explicit Cost + Implicit Cost
 Consider both explicit cost and implicit cost

ECONOMIC PROFIT FORMULA

 ECONOMIC PROFIT = TOTAL REVENUE – ECONOMIC COST

THREE TAYPES OF ECONOMIC PROFIT

 If Economic Profit Is Positive :- Abnormal Profit Or Supernormal Profit
 If economic Profit Is Zero :- Normal Profit
 If Economic Profit Is Negative :-Sub Normal Profit Or Loss

EMPLICIT VS EXPLICIT COSTS

 Are Two Types Of Microeconomic Concepts That Affect The Operation And
Accounting Of Business.

ECONOMIC COST
 ECONOMIC COST = EXPLICIT COST + IMPLICIT COST
IMPLICIT COST
 Comes from using an asset you already have rather than renting or buying
a new one, representing an expenditure of resources.
 They often represent the loss of income, but not the loss of profit.

 Is A Cost Has Been Already Incurred By The Individual Or Business But It Has
Not Been Reported As A Separate Expense
  Also help business managers make the most effective decisions for a
company based on profit and market condition.
 Are forgone interest and forgone wages
EXAMPLE OF IMPLICIT COST
 Bank reserve investment
 College courses that you take in place of working job
 Sick leave hours for qualifying employees
 Required funds on deposit
 Training session and hours new employees
 The decision to manufacture or produce one product over another
 The decision to specialize in making one specific type of product rather than
a variety.

EXPLICIT COST
 Are atypical business costs which appear in the general ledger and have a
direct impact on the profitability of a company
 Referred to as accounting cost,

EXAMPLE OF EXPLICIT COST

 Advertising Costs
 Depreciation Of Company Assets Such As Production Machinery And
Vehicles
 Employee Benefits Paid To Other Entities, Such As Health Care
 Employee Salaries
 Legal Fee
 Raw Material For Manufacturing
 Rent Office
 Taxes
 Utility Such As , Gas, Water And Electric Services
 Cost Of Purchasing the Tangible Asset Like Furniture
KEY TAKEAWAY:-
 IMPLICIT &EXPLICIT COST ARE IMPORTANT FOR UNDERSTANDING
BUSINESS PROFIT
 Implicit cost are not directly measurable ,while explicit cost are

Nb. Profitability Of Thee Bank, Each Branch Should Focus On:-

 Mobilize The Planned Lcy & Fcy Resource
 Work Aggressively On Transaction Migration
 Effectively Utilized Sales Lead To Mobilize Resource and Maximize
Digital Users
 Effectively Manage Opex
 Enhance Staff Productivity And
 Properly Collect Income From All Service