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← Series 79: Collection, Analysis & Evaluation of Data
Series 79 practice questionmediumComparable Company Analysis

In a comparable company analysis, calendarization is performed to:

  1. AAdjust stock prices for dividends paid during the period
  2. BConvert foreign currency financial statements to US dollars
  3. CAlign financial data of companies with different fiscal year-ends to the same time period✓ Correct answer
  4. DAnnualize quarterly financial data for companies that have not reported a full year
Explanation

Why C — Align financial data of companies with different fiscal year-ends to the same time period

Calendarization is the process of adjusting financial data for companies with different fiscal year-ends so that all data corresponds to the same calendar period. For example, if one company has a fiscal year ending in March and another ending in December, calendarization would pro-rate their financial data to a common period. This ensures that the trading multiples are calculated on a consistent basis and that any seasonal patterns do not distort comparisons.

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