Meaning and example
Normalized EPS is an estimate of earnings per share after explicitly explained adjustments or after bringing the business to a notional normal condition. Normalization may account for unusual income, a loss or a phase of the cycle. It is not automatically more accurate than the reported measure: selecting a sustainable condition requires assumptions.[94](#source-cv-cashflows)
If trailing EPS is notionally 11 roubles and 2 roubles relate to an effect excluded under the chosen method, the normalized base is 9. At a price of 120 roubles, the ratio is about 13.33. These figures illustrate the method; they do not establish that a particular adjustment is acceptable.
Controls and distinctions
Keep the original EPS, the basis for every change, the tax consequences and the corresponding number of shares. Basic and diluted EPS have their own calculation rules under IAS 33.[79](#source-term-ias33) Recurring expenses must not be called one-off merely to increase earnings. A normalized measure differs from both the historical figure and the forecast for the coming year; label them separately. Related reading: [market capitalization and multiples](/guides/market-cap-and-multiples/) and [financial statement adjustments](/guides/financial-statement-adjustments/).