A steady-state cash flow figure that anchors valuation beyond the balance sheet.
Published: 2025-12-20
Definition
Earning power is the recurring, normalized cash flow a business can generate each period while keeping its asset base intact.
Why it matters
It anchors valuation when balance-sheet metrics alone are insufficient; stronger, steadier earning power supports higher justified prices.
Where to apply it
Estimate earning power alongside NCAV or cash metrics to cross-check value; discount aggressively if cash flows are volatile or depend on one-off factors.