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Present value of future earnings method & Limitations of HR Accounting

Started by Suraya Yasmen, September 29, 2018, 12:09:13 AM

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Suraya Yasmen

September 29, 2018, 12:09:13 AM
    Present value of future earnings method & Limitations of HR Accounting

    Present value of future earnings
             Lev and Schwartz (1971) proposed an economic valuation of employees based on the present value of future earnings, adjusted for the probability of employees' death/separation/retirement. This method helps in determining what an employee's future contribution is worth today.

    Limitations
    • The measure is an objective one because it uses widely based statistics such as census income return and mortality tables.

    • The measure assigns more weight to averages than to the value of any specific group or individual.
       
    Source: wikipidia
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