A Blueprint for Digital Companies’ Financial Reporting
AUGUST 3, 2018
Currently, firms’ first report net profits and then back out many of these one-time items to present a non-GAAP (Generally Accepted Accounting Principles) profit number. Because investors consider these non-GAAP numbers to be value-relevant, we propose a more direct way for them to be calculated. Yet, we believe that the benefits of disclosures, particularly in improving the efficiency of capital allocation in the markets, outweigh their costs.