n Professional Accountant - How professional accountants can improve stakeholders' understanding of organisational performance - : IFAC

Volume 2014, Issue 21
  • ISSN : 1680-7537


Many organisational leaders believe that measures developed under generally accepted accounting principles (GAAP) often do not fully capture an organisation's current performance or future prospects. To fill this void, they frequently provide additional financial measures that are not specifically defined by accounting standards: supplementary financial measures. Many such measures are widely used in both internal and external reporting, for example, Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA), Underlying Profit, and Free Cash Flow. However, some commentators believe that organisations use such measures in their external reporting to obscure poor performance.

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