Slide MGT409 Slide11

Equity Analysis and

Equity Analysis and

Valuation

Valuation

Earnings Persistence

• A good financial analysis identifies components in earnings that exhibit stability and

predictability-that is, persistence components.

• Recasting aims at rearranging earnings components to provide a meaningful

classification and relevant format for analysis.

Earnings Persistence

•

Analysis of operating results for the

recasting and adjusting of earnings

requires reliable and relevant information.

•

Major sources of this information include:

▫_{Income statement}

 _{Continuing operations}  _{Discontinued operations}

 _{Extraordinary gains and losses}