Robert A. Bonavito, CPA PC

RABCPA PC Blog

23. Midyear Convention

What is a midyear convention?  In finance when we discount cash flows we assume that all the money is received at the end of the year, and discount it back.  Obviously, this has some questionable assumptions, mainly that all the money would be received at December 31st. In order to make the projections more realistic many times we will adopt a midyear convention. This assumes that we receive the cash flow evenly throughout the year. While this is not perfect it is more accurate than what is typically done in most cash flow calculations.

Posted September 28, 2018 by Robert A Bonavito in Business Damages

23. Midyear Convention

What is a midyear convention?  In finance when we discount cash flows we assume that all the money is received at the end of the year, and discount it back.  Obviously, this has some questionable assumptions, mainly that all the money would be received at December 31st. In order to make the projections more realistic many times we will adopt a midyear convention. This assumes that we receive the cash flow evenly throughout the year. While this is not perfect it is more accurate than what is typically done in most cash flow calculations.

Posted September 28, 2018 by Robert A Bonavito in Business Damages

23. Midyear Convention

What is a midyear convention?  In finance when we discount cash flows we assume that all the money is received at the end of the year, and discount it back.  Obviously, this has some questionable assumptions, mainly that all the money would be received at December 31st. In order to make the projections more realistic many times we will adopt a midyear convention. This assumes that we receive the cash flow evenly throughout the year. While this is not perfect it is more accurate than what is typically done in most cash flow calculations.

Posted September 28, 2018 by Robert A Bonavito in Business Damages