Underlying Profit

DEFINITION of 'Underlying Profit'

A term used to describe the actual reflection of a company's profit. The underlying profit is not the required accounting profit that is recorded on financial statements and documents mandatory to follow preset rules and regulations. This number is calculated by the company to show what they believe to be an accurate reading of the company's profit position and may exclude one time charges or infrequent events.

BREAKING DOWN 'Underlying Profit'

The calculation is different for every company in that they begin with the accounting profit, and make adjustments as they see fit. In recent years, it has been argued that there should be some kind of guideline in place so that the reporting of underlying profits can be compared between companies.

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