Normalisation
Definition
Adjustments made to a company's historical financial results to remove the effect of one-time, non-recurring, or non-operational items, producing a normalised result that is more representative of the ongoing economic performance of the business. Common normalisation adjustments include removing one-time legal costs, restructuring charges, founder salary adjustments, and non-cash items. Every normalisation adjustment must be individually documented with a stated rationale.
Common Misapplication
The most common misapplication is applying normalisation adjustments to recurring items by labelling them as non-recurring. Recurring costs do not become non-recurring by being labelled as exceptional or one-time. Normalised results that exclude items which recur in every period overstate the ongoing profitability of the business.
FFI Standard Reference
This term is defined and applied in Book 4, Section 4.3: Comparable Company Analysis.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Normalisation. https://ffistandard.org/glossary/normalisation/. 2026.