NextGen

Non-GAAP Metrics for Denying Reality

'MIND THE GAP 5023794412' by http://www.cgpgrey.com. Licensed under CC BY 2.0 via Wikimedia Commons Quartz

EER: Earnings excluding reality

EBACT: Earnings before awkward Congressional testimony

EBACE: Earnings before all conceivable expenses

EASA: Earnings according to sycophantic analysts

While certainly taking things to an extreme, the article points to a real phenomenon that has worried regulators and investors: the increasing use and prominence of non-GAAP metrics. While less common after SEC guidance on what was and was not acceptable, companies have still used non-GAAP metrics as a way to massage bad news, such as a company that requested financial press reporting focus on their custom measurements instead. In 2016, it was reported that at least 26 S&P 500 companies emphasized the non-GAAP metrics, which showed gain, over the GAAP metrics, which showed loss.