Non-GAAP Measures

Brief Definition

Non-GAAP measures are financial metrics that do not conform to Generally Accepted Accounting Principles (GAAP). Companies use these alternative performance measures to provide a clearer picture of their financial performance, excluding items they believe are non-recurring, non-cash, or not reflective of their core operations.

Further Explanation

Non-GAAP measures are financial metrics that do not conform to Generally Accepted Accounting Principles (GAAP). Companies use these alternative performance measures to provide a clearer picture of their financial performance, excluding items they believe are non-recurring, non-cash, or not reflective of their core operations. These measures can offer more insight into the company’s ongoing business activities and performance trends.

Example:
A company reports a net income of $10 million under GAAP. However, this includes a $2 million restructuring expense. Using a non-GAAP measure, the company might present an adjusted net income of $12 million, excluding the restructuring cost to show what they consider a more accurate representation of their operational performance.