FIN 100 WEEK 4 QUESTIONS

FIN 100 WEEK 4 - Chapter 8 page 269 271 review questions 1 2 3 5 Review Questions 1 What are pro forma incremental earnings Pro-forma comes from

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Review Questions 1. What are pro forma incremental earnings? Pro-forma comes from latin and means “for the sake of the form”. Pro-Forma earnings are projected earnings based on assumptions and often used to present a business plan. They can also refer to earnings which exclude non-recurring items ( write-downs, goodwill amortization, depreciation, restructuring and merger costs, interests, taxes, etc). These items are excluded by the companies so they can present its figures more clearly to investors. Pro-forma earnings are not derived by standard GAAP methods and they do not comply with any standardized rules or regulations. Positive pro-forma earnings can become negative at the time when GAAP requirements are applied and certain items are included in the calculations. 2. What is the difference between pro forma incremental earnings and pro forma free cash flow? Pro-forma free cash flow is the net operating cash flow minus the new invested capital and it
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This note was uploaded on 05/10/2011 for the course FIN 100 taught by Professor Emil during the Spring '11 term at Aberystwyth University.

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FIN 100 WEEK 4 - Chapter 8 page 269 271 review questions 1 2 3 5 Review Questions 1 What are pro forma incremental earnings Pro-forma comes from

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