Why should I choose AnalystNotes?

Simply put: AnalystNotes offers the best value and the best product available to help you pass your exams.

Basic Question 4 of 6

Which statement(s) is (are) true regarding earnings normalization?

I. With normalizing adjustments, analysts attempt to adjust private company earnings to a reasonably well-run, public company equivalent basis.
II. Unlike overstated expenses, understated expenses should not be adjusted in the process.

User Contributed Comments 0

You need to log in first to add your comment.
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz

Tamara Schultz

Learning Outcome Statements

explain the income, market, and asset-based approaches to private company valuation and factors relevant to the selection of each approach;

explain cash flow estimation issues related to private companies and adjustments required to estimate normalized earnings;

CFA® 2025 Level II Curriculum, Volume 4, Module 25.