Reconciliations: linkage within financial statements

What are the key reconciliations investors use?

  • Net debt reconciliation – a net debt reconciliation shows how an entity’s indebtedness has changed over a period. It allows investors to see how business financing has changed over the year and how the company is managing its resources (see also Investor view 2, ‘Investors call for improved net debt reconciliation’).
  • Reconciliation between non-GAAP measures and IFRS equivalents – non-GAAP disclosures are measures of performance other than those prescribed by IFRS. They include ‘EBTIDA’, ‘trading profit’, ‘cash earnings’ and ‘underlying profit’.
  • Reconciliation of cash tax paid – investors want to know information on tax payments/refunds to understand if the taxes paid relate to ongoing operations or one-off items.