If an Analyst Estimates the NOPLAT for Each of the Divisions

question 8

True/False

If an analyst estimates the NOPLAT for each of the divisions in a three-division firm at $50 million,$30 million,and $20 million,respectively,it's safe to assume that the divisions contribute 50,30,and 20 percent,respectively,to overall firm value.

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Definitions:

Sales Revenue Approach

A method of recognizing revenue based on the sales transactions processed by a company.

Unadjusted Year End

This term refers to the financial results and statements of a company that have not gone through adjustments for various accounting entries at the end of the fiscal year.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals to ensure a company's bookkeeping system is mathematically correct.

Allowance for Uncollectibles

A contra-asset account used to reduce accounts receivable to its net realizable value by estimating the amount of receivables that may not be collected.