Thinking allowed — Non-GAAP and Alternative performance measures
Alternative performance measures (non-GAAP financial measures) have become the subject of increased focus by securities regulators and standard-setters.
The regulators and standard-setters face a challenge. If their requirements are overly prescriptive they could actually reduce the usefulness of annual reports when their intention is to increase their credibility and usefulness. There are good reasons for companies to supplement GAAP information. The key is ensure that non-GAAP financial measures are part of good communication and do not undermine or confuse the GAAP information.
In this publication we take a look at non-GAAP financial measures and the reasons companies feel compelled to report them, and challenge some of the common perceptions about them.