Asked by Jaylee Field on Jul 07, 2024
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Briefly define "abnormal earnings" and describe the key features of the abnormal earnings approach to valuation.
Abnormal Earnings
Income that deviates significantly from what is typical or expected, usually referring to profits significantly higher or lower than those typical for the industry or the company's history.
Valuation Approach
The methodologies and procedures used to determine the value of an asset, a company, or a financial instrument.
- Comprehend the techniques and importance of free cash flow and abnormal earnings in determining valuation.
Verified Answer
Learning Objectives
- Comprehend the techniques and importance of free cash flow and abnormal earnings in determining valuation.
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