Profit measurement today versus what should happen

1. Simplified models vs. The most comprehensive model
2. Limited sensors vs. Unprejudiced observation
3. No fixed zero vs. A fixed zero
4. Pre-programmed vs. No output-steering by steering the input
5. Poor signal compilation vs. Unequivocal compilation 

Mentioned in many management accounting and finance texts: "A profit calculation system is by definition (…..) also a valuation system." This is the crux of the matter. It implies that the measuring data is polluted. 

ref. 1
Measuring influences the measuring system by the object that is being measured. It involves a model of the reality but this has to be a model which is true to nature. Everything one is aware of, both economically and generally, should be a parameter i.e. part of the best possible model. There must be the possibility to enter all values and standards. 

ref. 2
An unprejudiced observation of the object is of paramount importance. However, this does not happen. Profit calculation systems all have limited sensors which do not perceive the entire relevant reality; they are observing in a selective way. One system simply neglects the possible existence of normal stock, another system acknowledges gearing only as a uniform gearing ratio. A third is tied up for instance to just one valuation-basis, excluding all other possibilities. 

ref. 3
Profit measurement requires the cardinal scale. One is in need of a fixed zero i.e. the normal balance sheet in each and every detail. Without a fixed zero, measuring profit is impossible. Profit calculation systems in common usage proclaim a fictitious zero on the basis of a simplified model. The most comprehensive model can obviously be simplified by certain adjustments. Some parameters can be set to zero from the beginning, then these are ruled out, and others can be filled in with desired values and standards. For example a uniform standard for financing and historical costs all along the line, with FIFO (First In, First Out) or LIFO (Last In, First Out), can be used, if so required. 

ref. 4
In all systems for determining profit in use so far, pre-arranged values and standards are to be found. Signals are passed on, apart from the object to be measured. These values and standards are artificial things. Consequently the outcome, the officially presented 'profit' figure, is artificial. These outcomes are spurious. The measuring instrument itself does not have anything to say, want or choose. A good meter is completely neutral and does what it should do: measuring, nothing more nothing less. A meter, any meter, should measure precisely, i.e. nothing may be added to or detracted from what is being measured. 

ref. 5
The necessary calculations - one system in this way, another system in that way - are digressive, and not user-friendly, although user-friendly application is one of the first requirements of a measuring instrument. Beyond the sensors, after the data-acquisition, the matter is signal compilation. Working out, processing, pure transforming of data, should be possible, regardless of the value of the signals, with one and the same algorithm. The detours that must be followed when working with the different profit calculation systems, have to be eliminated by the best possible algorithm. There is no reason whatsoever to do the calculations in a different way. Starting with any set of values and standards, they should be compiled in the same best way. 

In summary: for 'measuring' there are a number of issues (the best possible model true to nature, unprejudiced data gathering, a fixed zero, etcetera) which have to be settled completely before one can really call the process 'measuring'. Everything around the measurement has to be indisputable, resulting in a transparent outcome. Profit figures should not be blindly accepted, it is always necessary to see test and proof.