capitalization of earnings method
Definition
Valuation of a going concern business on the basis that the operations will continue to yield constant and regular earnings. These earnings (called 'normalized earnings') are multiplied by a capitalization rate (normally the reciprocal of the desired rate of return) to arrive at the value of the business.
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capitalization of earnings method is in the Accounting & Auditing, Banking, Commerce & Finance and Investing subjects.
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