题目内容

In normalizing historical data, monthly revenue may be aggregated into quarterly or even annual data to minimize possible distortions in earnings or cash flow due to inappropriate accounting practices.

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If the target firm’s ratio of bad debt reserves as a percent of projected revenue is decreasing, the analyst should be concerned that projected net revenues could be higher than would actually be realized due to inadequate future reserves for probable uncollectable accounts.

The output of M&A models is only as good as the accuracy and timeliness of the numbers that are used to create the model and the quality of the assumptions used in making the projections.

When the target firm is an operating division of a larger firm, it is common for the parent to provide services to the target at below market prices. In calculating the target's standalone value, it is necessary to subtract the difference between the market price of these services and actual cost paid to the parent from the target firm's net income.

Projecting as many of the key income, cash flow, and balance sheet components as a percent of projected revenue helps to ensure the internal consistency of the model.