GDP vs GNP
GDP (Gross Domestic Product) is the money value of all the Goods and Services produced within the country.
So GDP of India is the value of all the goods and services produced within the India during the given year.
GNP (Gross National Product) is the money value of all the goods and services produced by the RESIDENTS of a country,no matter whether produced within the country or abroad (resident concept).
Residents refer to the people and corporations that normally reside in a country for more than 1 year, and work there.
Example - An Indian national, say Mr. Roy is working in France for less than 1 year & contributes to French GDP as he is working in France. But he also contributes to Indian GNP as he is an Indian Resident, working abroad.
Corporate Profits to GDP Ratio
Corporate profit , also called net income, is the amount remaining after all costs, depreciation, interest, taxes, and other expenses have been deducted from total sales. Profit is also referred to as the bottom line, net profit or net earnings. The formula for profit is:
Corporate Profit=Total Revenue - Total Expenses
Corporate profit is an economic indicator that calculates net income using several different measures - Profits From Current Production, Net income with inventory replacement and differences in income tax and income statement, depreciation taken into consideration. Also known as operating or economic profits.
Significance of Corporate profits:- Represent a corporation's income, they are one of the most important things to look at when investing. Increasing profits means either increased corporate spending, growth in retained earnings or increased dividend payments to shareholders.
》India’s corporate profit to GDP ratio dropped from 7.8 percent to 3 percent over 2008-18.
》We also observed that the real GDP growth had improved in the last 4 years going up from an average 6.7 percent in 2006-2014 to 7.3 during 2015-2018.
》Operating margins have improved during 2014-2018. At the same time, growth in gross fixed capital formation in the economy has gone down from 15.4 percent during 2006-2014 to 8 percent in 2015-2018 period.
》This means the overall productivity has improved in the economy, which can be attributed to numerous external factors.
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