Securities and Finance

Lost Profit Analyses

There are many scenarios in which a business's ability to earn profits has allegedly been compromised by another party's actions. While one can always get a quick feel for the change by comparing the level of profits before and after the relevant actions, NERA economists go beyond such simple comparisons and bring economic, statistical, and accounting expertise to bear on such questions. Depending on the situation, it is often possible to develop more sophisticated analyses that account for changes in the industry as well as pre-existing projections or trends that would have led to a change in profits even in the absence of any outside influence. When feasible, statistical analyses can help one draw an inference about whether a change in profits was so unusual as to be of a magnitude that would be unlikely to be caused by normal fluctuations in the business in the absence of some form of material outside influence.