You're directing a third-grade production of The Cow That Mooed. You originally cast little Timmy as the cow. But he couldn't get the moo right. No matter how much you berated him, no matter how much you tried to tap into his buried reservoirs of emotion, he wouldn't commit to the moo in a way that resonated on a spiritual level. Mostly, he just cried in the corner.
Time to recast. Maybe Suzy can do it.
Take that concept to the financial world, and you've got an earnings recast. A company made a mistake the first time it reported its financial figures. So it has to change them. The figures get recast...just like Timmy.
A company reports a profit of $2 million for the second quarter of 2015. Some time passes. It's now 2018 and an accountant is re-reading some old financial documents (for fun, as accountants are wont to do). He discovers a decimal error. The company really only made $200,000 for the second quarter of 2015.
So the company has to change the numbers for the quarter...the quarter that ended three years before. It has to let investors and regulators know about the mistake and report the real figure.
The process is called an earnings recast, or an earnings restatement. It's usually bad news, but a failure to make the restatement once a problem is discovered can lead to regulatory investigations, which are usually worse news.
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Finance: What are normalized earnings?5 Views
Finance allah shmoop what are normalized earnings All right this
is norm or it's supposed to be We just couldn't
get the licensing rights from him So this is our
public domain version of norm from cheers Sorry And this's
normal that's a bell curve Yeah you're in the ebola
abatement business Each year the government spends a few bucks
on you Just keep you alive Is a business in
case Well you know a few hundred million peoples faces
start melting off like you know that scene in indiana
jones you know the good ones so your earnings are
usually here and here and here and here a buck
a buck twelve twenty three twenty four years I'm like
that But then one year after miss malaria's high school
biology class takes a field trip to study monkeys bats
and beetle crap in caves in central ghana Well your
business picks up So this year when the gove is
having to spend a fortune on ebola abatement you were
nine dollars and forty two cents a share And since
world awareness has suddenly shot up the most popular yahoo
search term index that thing well next year you'll still
learn five seventeen to share even though most the ebola
is pretty much gone now But then things quiet down
in life goes back to normal where your earnings are
you know normal and you could plot some kind of
line through them And if someone asked you what normalized
earnings are in your little ebola abatement company well you
could say that your normalized earnings are in about a
buck twenty Well fortunately making out with the nigerian fruit
bat is not normal so you probably don't have to 00:01:40.539 --> [endTime] worry about contracting ebola Ooh
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