PRECEDENT - Tax Ninja's Word of the Week

Precedent

(noun pres-i-du nt; adjective pri-seed-nt)

• Noun (Generally used in terms of Law)

A legal decision or form of proceeding serving as an authoritative rule or pattern in future similar or analogous cases.

Any act, decision, or case that serves as a guide or justification for subsequent situations.

• Adjective

Going or coming before

• Verb (Precede)

To have higher rank  than (someone or something else).

To go before, go in front of

• General Usage: 

An action, situation, or decision that has already happened and can be used as a reason why a similar action or decision should be performed or made.

• Financial Usage:  

Precedent Transaction Analysis  is a valuation method in which the price paid for similar companies in the past is considered an indicator of a company's value. It creates an estimate of what a share of stock would be worth in the case of an acquisition.

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