How to improve persistency of accrual component of earnings

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Max Gallagher: I heard the Accounting Standards Board (AcSB) takes a position that accrual anomalies could be reduced if the accrual component of earnings is more persistent. This makes a lot of sense to me, but I don't know how to improve the persistency of the accrual component of earnings. Do you guys have any inputs?

Brendan Price: Look, in the earnings announcement, Best Sell also reported that its same store sales increased by 1.5 per cent. In my marketing class, I learned that this measure gauges a retailer's health as it excludes sales from stores that recently opened or closed during the year. Maybe investors should focus on this measure, instead of earnings, in valuation. Perhaps Best Sell should report this figure on the income statement. Eh?

 

Reference no: EM13855547

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