Will the proliferation of non-GAAP earnings measures ever end? The short and long answers are “no—neither now nor ever.” Almost every public company uses them in some manner, as do most analysts. Properly used, non-GAAP measures are extremely valuable. For example, they can enhance financial analysis by isolating the effects of items that do not promote an understanding of historical or future trends of earnings or cash flows. At the other extreme, unfortunately sometimes non-GAAP performance reporting is used to ignore inconvenient charges or to perfume the pig, thereby giving non-GAAP reporting a bad name.
