Editing Transfer pricing (section)

===Comparable profits method===
The Comparable Profits method (CPM)<ref>[http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&&rgn=div8&view=text&node=26:6.0.1.1.1.0.8.186&idno=26 26 CFR 1.482-5].</ref> was introduced in the 1992 proposed regulations and has been a prominent feature of IRS transfer pricing practice since.  Under CPM, the tested party's overall results, rather than its transactions, are compared with the overall results of similarly situated enterprises for whom reliable data is available.  Comparisons are made for the profit level indicator that most reliably represents profitability for the type of business.  For example, a sales company's profitability may be most reliably measured as a return on sales (pre-tax profit as a percent of sales).

CPM inherently requires lower levels of comparability in the nature of the goods or services.  Further, data used for CPM generally can be readily obtained in the U.S. and many countries through public filings of comparable enterprises.

Results of the tested party or comparable enterprises may require adjustment to achieve comparability.  Such adjustments may include effective interest adjustments for customer financing or debt levels, inventory adjustments, etc.