Tuesday, 30 July 2013

Are the earnings of the business relatively predictable or highly volatile?

A couple of important points worth considering in understanding a potential investment is whether the earnings of the business are relatively predictable or likely to be highly volatile.  

It is relatively easier to invest in something where the projected earnings are likely to have a strong element of stability about them.  

Earnings should preferably be consistent, sustainable and predictable.  "The past is so much easier to predict."

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