I don't think that a few fractions of a percent either way will make much difference, seeing as one is not putting it into a "discounted" formula as one uses, for example, for the DCF calculation. You are not putting the rate percentage to the "power of" anything, such as "1,15^10". Well, I think that when you divide the pretax earning by the r (whatever your r is) you're effectively calculating a perpetuity (discounted for infinity) or something like :
Pretax earning * ((1-(1+r)^( - a very long period of time or infinity)) / r)
when the t (time) is large, the numerator tends to 1 and you end up with Pretax earning / r
when t is 10 for exemple, you have a fraction of the perpetuity
If my maths are good, a few fractions of a percent will make a bigger difference with a perpetuity than with
a smaller power of something.
On financial statements, I think the BS, IS, CFS and CSE are all important because they act like checks & balances. Sometimes I read 10-Q/K backward: I start with the notes.
Good Investing
WIll |
