Not just profit but organic profit

February 19, 2009 3:20 AM

What is meant by the term "Organic Profit"?
posted by rongorongo to Work & Money (5 answers total)

Best answer: According to a definition here:

"Organic profit growth is growth excluding exchange rate effects, changes in consolidation, amortisation of goodwill, exceptional items and changes in accounting policies."
posted by le morte de bea arthur at 3:47 AM on February 19, 2009

Response by poster: Thanks - the term seems to be rarely enough used that I wonder if it has a more common synonym? Also the choice of the word "organic" seems a little strange.
posted by rongorongo at 4:09 AM on February 19, 2009

Actually, we use variations of this all the time at my work. It is usually used in terms of Organic growth and GMV, but is a good metric in showing how the company is growing without including things like buyouts, goodwill etc.

If you understand the concept, "organic" should make sense. It is the profits you bring to your business from natural growth of the company, as opposed to "special" circumstances.
posted by OuttaHere at 5:25 AM on February 19, 2009

Best answer: "Organic growth" is a very common term when discussing the financial results of a company that makes a lot of acquisitions. Organic growth/profit being the results of the pre-existing business before taking into account the financial results of acquired companies. Lots of examples in quarterly earnings announcements.
posted by mullacc at 7:10 AM on February 19, 2009 [2 favorites]

In the context of a professional services firm, where the opportunity cost of acquiring new business is high, organic growth is a key metric. All being well, from organic growth comes organic profit. It doesn’t leap to my lips but it is a readily comprehensible concept.
posted by dmt at 8:02 AM on February 19, 2009