Why Care About Economic Cost? question, economic, statements

grharmeyer

Hi All,

I'm reading through Chapter 24: Employee Compensation. In it we are adjusting financial statements for economic costs. The big question is: Why should analyst care about the economic cost to a company?

Thanks.

benbenxiong

Yes, Dreary is rigth.

In addition, If you realise, management has control in no. of actuarial assumption, which they have a call to be aggressive or conservative. Therefore, for analytical purpose, we want to know the economic reality of the pension expense. In essence, we are eliminating the difference assumptions made by the management across companies.