In April, for example,
When the Chesterfield company reported second-quarter results in July, the order was reversed to give net income -- the time-honored accounting measure of profitability -- pride of place.
Chalk it up to guidance that the
The guidance didn't have a specific effective date, but most companies seem to have complied quickly. According to Audit Analytics, 81 percent of large companies presented their GAAP results first in July and August earnings reports, up from just 49 percent in April, May and June.
At least six
The non-GAAP measures typically omit noncash or nonrecurring expenses. Some investors say the numbers tell them how much cash a company can generate sustainably.
As their use has grown, however, critics have worried that companies are trying to paint their results in the most favorable light. Last year, "as reported" profits from the
"There's a reason they had to tweak the rules," Moehrle added. "We were going toward a 'Hey, look over here, don't pay attention to that GAAP number' attitude."
"Ultimately, what the average investor should be looking for is how much cash did the company generate," Terril said. "Sometimes GAAP doesn't give you a very good idea of that."
Niemann would like to see the
It's possible the
At least we now get to see the real bottom line before the rose-tinted version, but companies still have plenty of leeway to make their results seem prettier than they really are.
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