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Journal of Business Valuation and Economic Loss Analysis

Editor-in-Chief: Ewing, Bradley T. / Hoffman, Jim

CiteScore 2017: 0.32

SCImago Journal Rank (SJR) 2017: 0.160
Source Normalized Impact per Paper (SNIP) 2017: 0.622

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Computing Lost Profits in Business Interruption Litigation: A General Model

Stanley Stephenson / David A. Macpherson / Gauri Prakash-Canjels
Published Online: 2012-05-11 | DOI: https://doi.org/10.1515/1932-9156.1118

This paper focuses on business interruption litigation and how to compute lost profits as a remedy. The main contribution of the paper is development of a general model of economic damages which assesses lost profits by measuring the incremental changes in revenue, variable costs, and fixed costs. Prior treatments can be understood as special cases to this general model. Several sources of economic damages can now be considered due to business interruption, including changes in prices, quantity sold, variable cost structures, fixed costs, and extraordinary expenses. We also offer case examples using the proposed framework and provide practitioners with suggestions for damages estimation.

Keywords: business interruption; damages; lost profits

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Published Online: 2012-05-11

Citation Information: Journal of Business Valuation and Economic Loss Analysis, Volume 7, Issue 1, ISSN (Online) 1932-9156, DOI: https://doi.org/10.1515/1932-9156.1118.

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©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston.Get Permission

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