Asked by Austin Vaughn on Jul 02, 2024
Verified
A component that is valuation-relevant,but is not expected to persist into the future is a
A) permanent earnings component.
B) transitory earnings component.
C) noise component.
D) quiet component.
Valuation-relevant
Valuation-relevant refers to information or factors that can influence the assessment of an asset's or company's value during a valuation process.
Transitory Earnings Component
The part of earnings believed to be temporary or non-recurring and not indicative of the company's ongoing financial performance.
- Examine the performance of different techniques in credit analysis.
Verified Answer
HH
Hizar Hayat7 days ago
Final Answer :
B
Explanation :
A component that is valuation-relevant but not expected to persist into the future is known as a transitory earnings component. This type of component reflects short-term fluctuations in a company's earnings that are not expected to continue in the long term. Unlike permanent earnings components, transitory earnings components are not considered to be a reliable indicator of a company's future earnings potential. The other options, (A) permanent earnings component, (C) noise component, and (D) quiet component, do not fit the definition of a component that is valuation-relevant but not expected to persist into the future.
Learning Objectives
- Examine the performance of different techniques in credit analysis.
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