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A New Approach To Cyclical Business Analysis
Salz, Frank
9/3  (Spring 1967): 65-76

Gross National product (GNP) is one of the most comprehensive single economic measure. Economists and those involved with business process have increasingly centered their attention on GNP. But to assist the owner, manager or investor in the business, the focus should be on the rate of change (ROC) of GNP and not on the GNP itself. This is because profits and closely related aspects, such as prices, profit margins, and demand pressures depend on the changes in GNP, not its quantity or direction. This article presents a unique approach to business analysis geared for the purposes of owners, managers and investors in enterprises. The author suggests that GNP should be analyses and forecast, not on the basis of income-expenditure components, but on the basis of its two components, money and its turnover. Then because changes in profit are related not to GNP as a total, but to its ROC, all three, the two components and their total be studied in terms of ROC rather than their absolute figures.

 

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