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a bit bummed that it wasn't more explicitly expressed in his ranker post and RM article. Seems hard to figure out when to use/ignore proforma figures--again it wasn't obvious when just flipping to the income statement. Can one use the ranker without a cpa?


Usually, I try to add an explanatory note whenever any extra jury-rigging goes into the analysis. Sorry I forgot that time. As for whether it takes a CPA to do Rankers, I really think it just takes practice. I, for one, don't have a CPA or a degree in accounting or even an advanced accounting course under my belt. But over time, I've looked at a lot of financial statements. At first, it was awkward as hell. But gradually, it got easier and easier. Nowadays, it's second nature. The key to finding those income statement items that you might want to back out of net income is to look for any "amortization of goodwill/intangibles" or "merger-related charges" or "extraordinary gain/loss." All of those items should be excluded whenever possible.

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