The Wall Street Journal contains an article by Michael Rapoport entitled "Has Kraft Heinz Made \(\$ 24\) Billion Since Merger or \(\$ 6\) Billion? It Depends."

Instructions

Read the article and then answer the following questions.

a. The article compares Kraft Heinz's cash flow from operations of approximately \(\$ 6\) billion with its "adjusted operating earnings" of approximately \(\$ 24\) billion. What is EBIDTA, and how does Kraft's "adjusted operating earnings" differ from EBIDTA?

b. In what ways is EBITDA similar to cash flow from operations, and how does it differ?

c. What is the Securities and Exchange Commission's position regarding the reporting of "tailored financial metrics" such as EBITDA?

d. What arguments do companies give for favoring non-GAAP earnings metrics relative to net income as determined under GAAP?

e. What is your opinion of whether companies should be allowed to report non-GAAP numbers and whether they provide useful information?