Pro forma earnings: Adding value or distorting perception?

From: The CPA Journal | Date: March 1, 2003| Author: | Copyright information

THE LACK OF CONSISTENCY IN THE WAY COMPANIES present pro forma earnings challenges the validity of the claim that pro forma earnings provide more useful information for investors.

Pro forma earnings statements are unaudited, unregulated what-if reports that are not required to conform with GAAP. First used to present a better comparison between two periods after a significant one-time event, such as a merger or acquisition, pro forma earnings usually exclude one or more items that are included in GAAP earnings. The use of pro forma earnings gained acceptance based on the argument that ...

Read all of this article with a FREE trial to HighBeam Research

Related newspaper, magazine, and trade journal articles from HighBeam Research

(Including press releases, facts, information, and biographies)

The dangers of pro forma reporting
; REPORTING PRO FORMA EARNINGS OUTSIDE OF THE CONTEXT OF GAAP...hence, stock price. The use of pro forma earnings statements in press releases issued...facilitate comparability. In contrast, pro forma earnings statements in current usage have...
Managed Disclosure and Pro Forma Earnings
; ...financial markets react more to "pro forma" earnings measures than to GAAP earnings...For instance, GAAP mandates pro forma earnings disclosures for certain accounting changes. GAAP also requires pro forma earnings disclosures for stock options...
SEC prosecutes first pro forma earnings fraud case and issues cautionary advice
; ...jawboning about the evils of pro forma earnings releases, the SEC has filed its first pro forma earnings fraud case. In the Matter of...create and publicize their own pro forma earnings releases. This article briefly...
Let's Be Balanced with Pro Forma Earnings.(Brief Article)
; Pro forma earnings can be analytically useful in describing...into a more confusing state. Today, pro forma earnings have widely different communication...greatly diminish. Companies Using Pro Forma Earnings By annual revenue Under $100 million...
All about pro forma accounting
; The use of pro forma earnings has become commonplace as companies...they are to be evaluated. These pro forma earnings purportedly portray better operating...guidance for an accepted definition of pro forma earnings. The term has been used in financial...
`PRO FORMA' RESULTS ARE BOUND TO CONFUSE
; ...against a company for using pro forma earnings to mislead the public. Trump...in a news release that its pro forma earnings of 63 cents per share had beaten...idea, in this case, was that "pro forma earnings" would equal "earnings from...
USING PRO FORMA NUMBERS DRESSES UP EARNINGS.(MoneyWise)
; ...Gap -- the difference between pro forma earnings and earnings prepared according...nation's accounting standard. Pro forma earnings, by contrast, are governed...their growth rates by using pro forma earnings, Bernstein wrote in a December...
Rule would require explaining 'pro forma'
; ...companies that publish "pro forma" financial results...accounting standards. Pro forma figures, which exclude...500 companies used pro forma results in press releases...companies that use pro forma results to show how...release saying its pro forma ...
Pro Forma Warning. (Advocacy).(from the Securities and Exchange Commission)(Brief Article)
; ...Commission (SEC) on the use of pro forma earnings per share measures used in...meaningful information. The use of pro forma earnings has become increasingly widespread...critics cite cases of abuse where pro forma earnings have been used to distort reality...
Cardinal sees 23% rise in pro forma earnings. (Cardinal Health Inc.)
; ...registered a 22.5% rise in second quarter pro forma earnings. Pro forma earnings rose to $30.5 million over the three months...Shoppe's results are included in both years. Pro forma earnings in the current year period exclude the effect...