When I’m not writing this column, I spend most of my professional time helping companies with difficult accounting and reporting questions. At the end of many of these consultations, my client often has one final question: “Can we non-GAAP this?”
In one regard, it’s an easy question. A non-GAAP measure is a measure of financial performance or cash flows computed in a way that isn’t completely in accordance with Generally Accepted Accounting Principles. Generally, non-GAAP measures are derived by making adjustments to a GAAP measure for a specific item. And there are no laws or regulations that prohibit particular items from being adjusted out of a non-GAAP measure. So I never need to answer “no” when I’m asked that question.
