Economic Damages & Lost Profits

Economic damages and lost profits analysis are two types of financial analysis that are often used in legal and business contexts to quantify the financial harm suffered by a party as a result of a particular event or circumstance.

Economic damages refer to the monetary losses incurred by a business or individual as a result of a specific event or situation, such as a breach of contract or an injury caused by someone else's negligence. Economic damages can include direct costs, such as medical expenses or repair costs, as well as indirect costs, such as lost profits or lost opportunities.

Lost profits analysis is a type of economic damages analysis that focuses specifically on quantifying the lost profits that a business or individual would have earned but for the event or circumstance that caused the harm. This type of analysis often involves forecasting the potential profits that would have been earned in the absence of the harmful event, and then comparing them to the actual profits earned after the event.

In order to perform an economic damages or lost profits analysis, a financial expert may be hired to examine the financial records of the affected party and conduct a thorough analysis of the relevant financial and economic data. The results of the analysis can then be used to determine the amount of compensation that should be awarded to the affected party.