Value in a Digital World by Francisco J. López Lubíán & José Esteves

Author:Francisco J. López Lubíán & José Esteves
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

3.The company’s size, measured by turnover.

4.The company’s presence, measured by the level of diversification.

Other practices that ensure consistency in the terms of comparison include: 1.Use of recent figures.

2.Elimination of non-recurrent events.

3.Adjustment of value if non-operative results are produced.

4.Use of figures drawn up using comparable accounting principles.

Moreover, earnings per share (EPS) are often employed in valuations using comparable figures. Again, it is a good idea to ensure the consistency of these figures, especially when they are taken from companies involved in high-volume asset sales and purchases. In these cases, it is important to distinguish the earnings derived from ordinary or recurrent transactions from those that are the result of a non-recurrent transaction. For example, when General Electric (GE) announced the sale of its Japanese insurance subsidiary, GE Edison Life, in mid-2003, the company did not report the atypical earnings associated with the sale, which brought more than $2,000 million in revenue. Analysts estimated possible after-tax earnings at $250 million, which represented approximately $0.025 per share. Bearing in mind that the consensus figure on GE’s EPS was $0.42, the impact of these atypical earnings was 6%.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.