However, even if the flat you are thinking of buying does come with a share of freehold, changing the lease might not be so easy.” (Property Buying and Selling 2007). Many financial analyses capitalize future earnings rather than dividends when valuing shares. Explain the rationale of this method and discuss its merits and limitations compared with those of the dividend valuation model-As far as the economists and financial analysts are taken into consideration, in case of a company, future earnings are much more beneficial than dividends. Earnings of a company mean, its financial viability, or the profits so derived due to the running of the company. Net Income, that is the expenditure so incurred should be deducted from its total income. In this particular concept, total income means the gross income derived by the company, as a whole. There is a slight difference between the total/gross income and the net income. Gross/ total income means, the ultimate amount of profit attained by the company, whereas net income means, out of the sum of gross or total income, a certain portion should be deducted for a meeting or recovering the amount of expenditure so incurred. Benefits Finance and Investment.
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