Un‐weighted Average Method– this method is the simple average of historical earnings and is most appropriate when there is no apparent trend or pattern in the past earnings history. Weighted Average Method – this method involves weighting the individual components in calculating the average and is generally used when the valuator concludes that one or more of the historical years is more representative of the future estimated benefits. Trend Line‐Static Method – this method is most appropriately used when a company’s past earnings trend has been consistent, either upward or downward, and can reasonably be expected to continue. Estimated future earnings are assumed to continue on a static basis (no growth) and generally put a heavier weighting on the most recent year. Unlike the weighted average method, this method lessens the impact of anyone particular year’s results.
