Non-GAAP Earnings

Loading the player...

What are 'Non-GAAP Earnings'

Non-GAAP earnings are 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.

BREAKING DOWN 'Non-GAAP Earnings'

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.

RELATED TERMS
  1. After Tax Operating Income - ATOI

    A company's total operating income after taxes. This non-GAAP ...
  2. Pro-Forma Earnings

    Projected earnings based on a set of assumptions and often used ...
  3. Accounting Earnings

    The amount of money a company has earned during a given period, ...
  4. Generally Accepted Accounting Principles ...

    The common set of accounting principles, standards and procedures ...
  5. Forward Earnings

    A company's forecasted, or estimated, earnings made by analysts ...
  6. Earnings Before Interest, Taxes, ...

    A measure of a company's financial performance that looks at ...
Related Articles
  1. Term

    What are Non-GAAP Earnings?

    Non-GAAP earnings are a company’s earnings that are not reported according to Generally Accepted Accounting Principles.
  2. Professionals

    Pro Forma Financial Statements

    We look at what these statements are and the disadvantages of using them.
  3. Economics

    What are Earnings?

    The amount of profit that a company produces during a specific period, which is usually defined as a quarter (three calendar months) or a year.
  4. Options & Futures

    Core Earnings Strip Away "Creative" Accounting

    This metric is an attempt to counteract creative accounting, but it poses its own set of challenges.
  5. Insurance

    Everything Investors Need To Know About Earnings

    We go over the concepts behind the excitement over the most important figure in the stock market.
  6. Investing

    How to Use Earnings Season to Make Better Decisions

    Earnings season reflects the state of the stock market, but also demonstrates how the overall economy is performing.
  7. Active Trading

    Creative Accounting: When It's Too Good To Be True

    Accounting practices have matured, but there are still plenty of ways that companies can disguise their financial results.
  8. Markets

    How To Evaluate The Quality Of EPS

    Companies can manipulate their numbers, so you need to learn how to determine the accuracy of EPS.
  9. Markets

    Earnings Quality: Defining "Good Quality"

    By Tim Keefe,CFA (Contact Author | Biography)In order to understand a company's financial report, you need to understand the accounting concepts that are used to justify the accounting rules. ...
  10. Fundamental Analysis

    The Financial Characteristics Of A Successful Company

    There are many factors that contribute to a profitable business. Find out what they are here.
RELATED FAQS
  1. What is the difference between EBIT and operating income?

    Read about some of the subtle differences identified by the SEC between earnings before interest and taxes, or EBIT, and ... Read Answer >>
  2. How is reconciliation treated under generally accepted accounting principles (GAAP)?

    Read about some of the different treatments of reconciliation under GAAP, particularly with respect to IFRS accounting or ... Read Answer >>
  3. What is earnings management?

    Before diving into what earnings management is, it is important to have a solid understanding of what we mean when we refer ... Read Answer >>
  4. What is the difference between EBITDA margin and profit margin?

    Learn about the EBITDA margin and what sets it apart from GAAP-approved profit margins such as the gross margin, operating ... Read Answer >>
  5. What is cash or pro forma income on an income statement?

    Understand what a pro-forma income statement is, how it differs from a standard income statement and why companies often ... Read Answer >>
  6. Why does financial accounting have to comply with GAAP?

    Read about the roles of the FASB and the SEC as it relates to generally accepted accounting principles for publicly traded ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center