August 21, 2019

Difference between Cost theory and Earnings theory

Cost TheoryEarnings Theory
MeaningCapital value is determined by adding all costs. Capital value is determined based on its earning capacity.
Base of theory Based on costs incurred Based on earning capacity
Applicability to companies New companies Existing companies
Calculation Easy and simple Difficult
Superiority Not so Superior to cost theory

Leave a Reply

Your email address will not be published. Required fields are marked *