Non-GAAP Earnings

     In the comparably normal times of yesterdays past, homeowners generally could expect the value of his/her/their house to appreciate over the period of time that he/she/they would be holding it.  Convert the casa to a rental property, however, and you found that Uncle Sam let you assume otherwise, and take a hefty depreciation charge against rental income based on a fictional view that the property would inexplicably now lose value over those years.  Furthermore, the accounting profession, through its Generally Accepted Accounting Principles (GAAP), sided with Sammy there.  Go public with this venture, and in their annual and quarterly reports, shareholders would receive the fictional account of what was not really going on here.

     Such nonsense occurs all over the business world's books and records, and not just with depreciation either - or because of Uncle Sammy.

     Our staff CPA started out as a Wall Street security analyst back in a prior century.  At that time, he and his compadres adjusted all kinds of stuff so that investors could see what they needed to by way of earnings, basically the number of greenback dollars really earned for shareholders and actually available for corporate purposes, including but not limited to stockholder dividends, capital projects, and reserves.  (In the above realty example, big bucks that had been classified as annual depreciation would usually get reduced to the relative pennies spent on asset maintenance.)

     CEOs and them always chafed at this process.  It made them look bad.  Like they were reporting fictional numbers, which they were, and using real secret numbers to run the business, which they also were.  So, wisely, CEOs and them decided to do something about their pathetic street cred.

     In today's times, corporate America has rightfully grabbed the bull by the horns and appropriately reports both of the numbers that have always been needed, GAAP earnings and non-GAAP earnings.  Our guy says this is the way it should be.  Accounting jocks with access to the real books and records are doing the due diligence rather than seat-of-the-pants-quant-flyboys like him.

     Some would have you think otherwise.  Surly reprobates would have you believe that GAAP produces some kind of holy word sanctified by an accounting religious order.  Valued subscribers, that is a crock.  Whatever the issues are with an earnings number, or all of the earnings numbers as some ill-mannered, bookkeeping-disadvantaged, agenda-proclaiming commentators incorrectly postulate, the sanctity of GAAP is not among them.

     Non-GAAP was, is, and probably will always be, the only way to give shareholders an important and inescapable part of everything they sorely need to know.