Business valuation

The twenty-first entry is le résultat normatif, and its adjective is the one an English reader will mistranslate with complete confidence. « Normative » exists, it looks identical, and in English it lives among rules and standards: a normative grammar prescribes, a normative framework tells people how to behave. Carried into a valuation, « normative earnings » would sound like the profit a company ought to make under some rule, a target imposed from outside. That is not what the French term means. Le résultat normatif is the profit a business earns in an unremarkable year once the accidents have been stripped out: the one-off sale of a warehouse, the lawsuit settled last spring, the founder who paid himself nothing. The norm in question is the usual, not the rule. French finance uses the adjective the same way elsewhere, so un besoin en fonds de roulement normatif is the working capital a business typically ties up rather than the amount it is told to hold. The English words are « normalised » or « maintainable », and a report that writes « normative earnings » has quietly turned a description into an instruction.