.Explain: Earnings Quality, Potential and Level in a valuation setting

.Explain: Earnings Quality, Potential and Level in a valuation setting

Expert Solution

When we talk about earning quality, potential earnings with reference to valuation this generally means that the earnings shown on the balance sheet should be sustainable and not manipulated by the management to avoid negative reaction in stock price. The company earnings can be significantly affected if in any quarter or financial year there has been a sale of asset or any particular division or there has been any significant write off in the current years, earning should be adjusted for these effects and then they should be used in the valuation process, this is because the sustainable earning which are coming from the core operations of the company has to be used while valuing asset not the fire sale asset price because then the price calculated through this method would not be reliable. The potential earnings of a company is how much the company will be able to generate earnings from its assets on year after year. The stage valuation or Level method is normally an approach that is used in the valuation of the startup. Startup companies at the beginning of their life do not generate profits.

jeff jeffy answered 1 year ago

Define and explain several quality indicators in a hospital setting?"

Present an argument explaining the benefits of the earnings-based valuation method. Explain how this valuation approach...

Present an argument explaining the benefits of the earnings-based valuation method. Explain how this valuation approach may generate accurate results. Evaluate the inherent challenges associated with earnings-based valuation. Provide suggestions for how analysts may overcome such challenges.

Explain how analysts assess the quality of reported earnings.

Explain the role of the customer in a total quality setting in a health care entity?

Explain the role of the customer in a total quality setting in a health care entity? Identify all customer types. What type of training should occur to address all customer types to ensure satisfaction and loyalty?

explain what is the difference between earnings quality and earnings management (approx. 250- 350 words)

Explain how setting a lower materiality level affects the number of items that are material and...

Explain how setting a lower materiality level affects the number of items that are material and affects the decisions about the nature, extent, and timing of the audit procedures.

Explain the importance of employee selection to a high level of internal service quality.

Explain two potential problems involved in stated preference methods for environmental valuation. Use an example to...

Explain two potential problems involved in stated preference methods for environmental valuation. Use an example to explain what makes thismethod attractive despite the potential problems. please state two problem only and use example

4 ways how earnings Management can affect the quality of earnings

A lot of research attempts to explain whether earnings is high quality. Suppose a researcher defined...

A lot of research attempts to explain whether earnings is high quality. Suppose a researcher defined low quality earnings as earnings that was subject to a restatement because of either error or fraud. First, define construct validity and provide an argument about whether restatements have a high or low level of construct validity.

Question