During the past several decades, companies have increasingly included custom metrics that dont conform to generally accepted
Question:
During the past several decades, companies have increasingly included custom metrics that don’t conform to generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS) as supplements to their official financial statements. These non-GAAP financial metrics are considered useful by many investors and analysts who believe that GAAP financial measures do not adequately capture a company’s value. However, the flexibility that companies have in what they report and how they report it is of growing concern, as non-GAAP financial measures may be misleading, difficult to interpret, or of a source of confusion. Consequently, guidance on the use of non-GAAP measures of performance was created in Regulation G of the Sarbanes–Oxley Act, which stipulates some basic requirements that apply to publicly disclosed non- GAAP material information.
Required:
a. List some of these non-GAAP measures of performance.
b. Briefly outline the guidance contained in Regulation G.
Step by Step Answer:
Financial Accounting Theory And Analysis Text And Cases
ISBN: 9781119577775
13th Edition
Authors: Richard G Schroeder, Myrtle W Clark, Jack M Cathey