To read this content please select one of the options below:

(excl. tax) 30 days to view and download

Real Profit Consciousness and the Investment Decision

Managerial Finance

ISSN: 0307-4358

Article publication date: 1 February 1977

58

Abstract

Most serious analysis of the problems currently experienced by manufacturing industry in the UK agrees on two main points: both the level of investment and the incremental output capital ratio in productive industry are much too low. In other words, not only do we invest less, in aggregate, than any of our major competitors but the increase in production obtained from each marginal increase in investment is also far less than might be reasonably expected abroad. The reasons advanced for these two related problems are legion but it is upon the former failure that attention is focussed here. Certainly there can be no doubt as to the truth of the diagnosis. The evidence confirms Britain's relative failure on this score throughout the post World War II period. Between 1955 and 1964, for example, whereas gross investment in Japan and West Germany (always the yardsticks used in such comparisons) averaged 28·8 per cent and 23·7 per cent of gross national product respectively, the comparable British figure was a niggardly 15·8 per cent. Since then the problem has become further compounded. In 1972, for example, per capita investment in new plant and machinery in America was 1·49 times the British figure, in Sweden 1·66 times, in France 1·72 times and in West Germany 1·90 times greater than in Britain.

Citation

Barry, D. and Edwards, J.R. (1977), "Real Profit Consciousness and the Investment Decision", Managerial Finance, Vol. 3 No. 2, pp. 97-105. https://doi.org/10.1108/eb013399

Publisher

:

MCB UP Ltd

Copyright © 1977, MCB UP Limited

Related articles