Capitalization of earnings method

Capitalization of earnings method,

Definition of Capitalization of earnings method:

  1. Valuation of a going concern business on the basis that the operations will continue to yield constant and regular earnings. These earnings (called normalized earnings) are multiplied by a capitalization rate (normally the reciprocal of the desired rate of return) to arrive at the value of the business.

Meaning of Capitalization of earnings method & Capitalization of earnings method Definition