I know that you can normalize earnings by finding the average return on equity over the past n years. Can you do the same thing with operating cash flows? or better yet, FCFF or FCFE? For example: divide historical cash flows by equity (beg and end ave)? Would this work the same as earnings for a cyclical business?
i think normalizing in the context of FSA in Level II means adjusting for off-balance sheet liabilities, etc.
maratikus Wrote: ------------------------------------------------------- > i think normalizing in the context of FSA in Level > II means adjusting for off-balance sheet > liabilities, etc. In the context of FSA, you are correct. In equity valuation they refer to it in a different manner.