Thinking about including COVID-19 adjustments in your non-GAAP measures? We break down the SEC guidance for you.
Companies use non-GAAP measures as a supplement to their financial statements to tell their stories. Some companies use them to show investors management’s view of their core operations, typically by eliminating nonrecurring charges and other amounts they believe are not indicative of their ongoing performance, such as major strategic restructurings.
A measure becomes a non-GAAP measure and is subject to the SEC’s non-GAAP rules and interpretive guidance when it excludes amounts that are included in (or includes amounts that are excluded from) the most directly comparable GAAP measure. Operating or other statistical measures (for example, unit sales, number of employees, and number of subscribers), certain ratios, and financial information that does not provide numerical measures that are different from the comparable GAAP measures (for example, the amount of debt repayments planned but not yet made) are not subject to the non-GAAP guidance.
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