Success is best measured by added value, not profit

Jules Goddard and Tony Eccles

This article argues that the success of a business is better measured by its added value rather than its operating profit.

SOURCE OF ERROR: accounting measures of performance

"Over the past decade the [accounting] profession has completely lost any sense of what accounts are for… Accounts do not reflect reality. They reflect an extremely complex set of standards comprehensible to a tiny minority of professionals, if that. They are full of weird conventions such as goodwill write-offs, share options accounting and revenue recognition that I defy anyone to call reality… If accounts reflect reality and accounting standards are just fine, how is it that every bank in the UK has in effect become bankrupt when every single one received a...

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