The selection of an appropriate maintainable profits number is subjective and is a matter of judgement on the part of the valuer. Adjusted current year profit or adjusted next year profit are common proxies for future maintainable earnings. The valuer should always critically examine past performance and probable future events in relation to the business or entity being valued. If the company’s recent performance is not assessed to be maintainable into the future, then the valuer may take a longer term view and may also incorporate prior years profits or an average of several prior years.

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