We often work with the concept of economic profitability, replacing accounting measures of costs and revenues with their economic counterparts. Frontier is experienced in using published accounting information and management data as the basis for such analysis. This requires us to work closely with clients and industry experts to understand the scale and nature of any adjustments that need to be made.
One of the most important aspects of measuring economic profitability is the appropriate valuation of assets. We are familiar with the techniques used to value both tangible and intangible assets.
We also use our expertise in estimating the cost of capital in our profitability assessments. This allows us to find out the extent to which profits may be considered high or low relative to the outturn we would expect to see in a competitive environment.
Read more about our cost of capital work.