Let’s say you have data that forecasts revenue and IVA for an industry (my firm uses IBISWorld, and you may be familiar with their reports, but the source should not matter). You want to use this data to forecast industry profit (let’s define profit as EBIT).
Can you take the forecasted industry IVA and subtract wages to back into forecasted industry EBIT? It seems to be that adding back wages to profit in a given year gives you a number that is very close to IVA, so I’m wondering if this is an identity that is actually legitimate.
Economic activity can be categorized in a number of different ways. They are frequently divided into three sectors at the highest level, according to the three-sector theory: primary (extraction and agriculture), secondary (manufacturing), and tertiary (other) (services). More extensive categories follow the economic sectors. From this theory, you can make the conclusion why the answer to the question is ‘‘B’’. When I started selling and buying used machinery from kitmondo.com, I started to understand it better, from this point of view.