Revenues, profits, expenses?

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    Jenny Thorvaldson
    When you say you are already accounting for the O&M expenses associated with the project – are you modeling these in IMPLAN? If so, are you running them as a series of Events for each line item being purchased? Our suggested approach would be analysis-by-parts: 1. Import the Industry Spending Pattern for sector 32 (Activity Options > Import > Industry Spending Pattern). Zero out the coefficient for commodity 3020 since you are not purchasing the gas. Go to Event Options > Change All > Normalize Events (the Sum of Event Values should now be 1.00). Set the Acvitity Level equal to the amount of the budget that is spent on goods and services (i.e., non-labor inputs) via the Edit Activity Button. This Event will give you the indirect effects. 2. Click New Activity > Labor Income Change, create an Event for Employee Compensation and input your loaded payroll figure (wages and salaries plus benefits). This Event will give you the induced effects. 3. The direct Output is $2M, the direct Employment is your known employment number, the direct Employee Compensation is your known payroll value, the direct taxes are your known tax values, and the direct Other Property Income is the leftover after subtracting the payroll and taxes from $1.5M)
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    John Wynne
    Thank you for the response. I see that method as how to model the expenses portion of the below equation. My questions pertain to the remaining parts. If we assume formula (1) holds and I know these facts: • Total operational revenues equals N • Expenses equal M (1) Operational Revenues = Expenses + Debt Payments + Taxes + Profits If I can estimate a value for Taxes, profits and debt payments can I model these components of the equation. My concerns are that the debt payments would have already been accounted for in the capital expenditure and therefore the only piece of the debt service that we could count the impact from is the interest on the debt? Is this correct? Can you model corporate profits and taxes paid? If so what is your recommendation? Thanks
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    IMPLAN Forum
    It sounds like you are accounting for the labor income portion in (1) as part of the expenses that are attributable to the 0.5M/Btu. If this is the case, we just want to ensure that you are accounting for that as labor payments, as these expenditures will make a different and separate contribution to the impact of the companies 'expenditures'. Corporate profits and taxes are traditionally treated as leakage from the IMPLAN system. Generally we don't know if, how, when or where those profits are actually spent, all of which are key to being able to determine potential impacts of those profits on the economy. If assume that some portion of the profits will be spent locally, you could use a Household Income Change Activity (selecting the highest income category would likely make the most sense). The Federal government is not likely to change its spending behavior as a result of local economic activity, so you won't want to model the impacts of the Federal taxes. You could run State/Local taxes through the State/Local Government Non-Education Spending Pattern (Activity Options > Import > Institution Spending Pattern) Regarding debt payments, you are correct that only the interest should be modeled - you can run these as an Industry Change Activity in the appropriate financial sector.
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