Non-GAAP Earnings

An alternative earnings measure of the performance of a company. Many companies report non-GAAP earnings in addition to the required GAAP earnings, stating that the alternate figure more accurately reflects their company's performance. Some common examples of non-GAAP earnings measures are cash earnings, operating earnings, EBITDA and pro-forma income.

Regulation from the governing financial bodies requires that every company reports according to GAAP principles to ensure that accurate and useful information be available to all potential users. The uniformity of the information makes comparison among industry measures easier. It is important as a savvy investor to ensure that the information you are using for comparison follows the GAAP rules and is not the (often more publicized) non-GAAP earnings number.


Investment dictionary. . 2012.

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