Asked by Kayleen Llanes on May 12, 2024
Verified
A component that is valuation-relevant and expected to persist into the future is a permanent earnings component.
Permanent Earnings Component
The part of a company's net income expected to continue in the future, excluding any extraordinary or one-time events.
Valuation-Relevant
Describes information or data that can significantly impact the valuation of a company's assets, liabilities, or equity.
- Understand the critical role of earnings data in projecting long-term cash flows that are sustainable.
Verified Answer
DP
Doan Phi HoangMay 15, 2024
Final Answer :
True
Explanation :
A permanent earnings component refers to a portion of a company's earnings that is expected to continue in the long-term future, and is therefore relevant to the valuation of the company.
Learning Objectives
- Understand the critical role of earnings data in projecting long-term cash flows that are sustainable.
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