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Discontinued operations

A business being sold or shut down, reported on its own line so that continuing operations can be compared with prior periods on a like-for-like basis.

Prior periods are restated to move the exiting business into the same line, which is helpful but means the revenue you remember from two years ago no longer matches what the filing now shows.

Consensus estimates and valuation-multiples should be built on continuing operations. The discontinued piece is valued as a one-off cash inflow when it is sold.

Example: Northwind agrees to sell its lawn-care division. Revenue from continuing operations is restated from $840M to $735M for this year and from $780M to $690M last year, so the growth rate changes from 7.7% to 6.5%.

Related: segment-reporting, one-time-charge, revenue

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