Are management’s expectations reasonable? Appraisers approach internally prepared data cautiously

Description

Abstract: Appraisers typically assume no responsibility for the validity and accuracy of management’s financial data. Still, an appraisal is only as reliable as the information on which it’s based. That’s why, before submitting their conclusions, appraisers routinely take a step back and ask: “Are management’s expectations reasonable?” This article looks at the different types of financial statements an appraiser might examine and common pitfalls involving previous years’ operating performances and trends. A sidebar explains the distinctions between forecasts, projections and budgets.