Glossary
Earnings normalisation
The whole discipline of restating reported profit to what an arm's-length owner would actually earn, with every restatement evidenced.
In plain English
Normalisation is the process that turns reported profit into a defensible earnings figure: owner remuneration set to market, related-party arrangements repriced, one-offs removed, missing costs put back in. Add-backs are individual moves; normalisation is the full exercise, done systematically across every line.
Done properly it cuts both ways. Normalisation removes costs a new owner will not carry, and it also inserts costs the vendor was not paying: a market rent, a manager's wage, realistic equipment replacement. A normalisation that only ever moves the number upward is a sales document, not analysis.
Why a lender cares
Assessors respect a normalisation that goes both directions, because it signals the file was built to be true rather than to be approved. The normalisation bridge in our reports shows every movement with its evidence, which is why the same bridge can serve the price negotiation and the finance application without changing a number.
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