Are the non-GAAP measures calculated consistently from one period to the next?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Are the non-GAAP measures calculated consistently from one period to the next?
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Non-GAAP measurements are used by businesses to enhance their financial statements to communicate their stories. Some companies use them to provide investors management's perspective on their core operations, generally by excluding nonrecurring charges and other amounts which they consider to be not reflective of ongoing performance, such as large strategic restructurings.
Earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted sales, free cash flows, core earnings, and funds from operations are all examples of non-GAAP financial measurements.
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