Unofficial Earnings Metrics Focus of US Accounting Board Inquiry

Metrics like free cash flow; adjusted net income; and earnings before interest, taxes, depreciation, and amortization are ubiquitous in corporate earnings reports. Now the US accounting standard-setter wants to know if they should be part of financial statements too.

The Financial Accounting Standards Board on Thursday issued an invitation to comment on whether to launch a formal project that could better define certain metrics that aren’t covered by its rules. The board’s research targets metrics that are derived from corporate financial statements or underlying accounting records but deviate from current requirements under US generally accepted accounting principles, or GAAP.

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