What Is the Rationale for Using Expected Earnings as a Basis

question 28

Essay

What is the rationale for using expected earnings as a basis for valuations?

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Definitions:

Discontinued Operation

A component of a company's business that has been sold or discontinued, with its results reported separately in the financial statements.

Comprehensive Income

The change in equity of a company during a period from transactions and other events from non-owner sources. It includes all revenues, gains, expenses, and losses.

Numerators

Numerators, in finance and accounting, typically refer to the top numbers in fractions or ratios, often used in calculations to assess financial performance measures, such as earnings per share.

Weighted Average

A computation that considers the different levels of significance of the figures in a dataset.