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Business Definition for: annualize
annualize
to extend an item to an annual basis. It is a procedure specified by the internal revenue code whereby taxable income for part of a year is multiplied by 12 and divided by the number of months involved. For example, if taxable income for 3 months is $20,000, it will be annualized as follows:
| $20,000 | x | 12 3 |
= | $80,000 |
Annualizing is common in financial forecasting.
annualize
to convert to an annual basis. For example, if a mutual fund earns 1% in a month, it would earn 12% on an annualized basis, by multiplying the monthly return by 12. Many economists annualize a monthly number such as auto sales or housing starts to make it easier to compare to prior years.
Copyright © 2005, 2000, 1995, 1987 by Barron's Educational Series, Inc., Reprinted by arrangement with Publisher.
Copyright © 2006, 2003, 1998, 1995, 1991, 1987, 1985 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2006, 2003, 1998, 1995, 1991, 1987, 1985 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
