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Chapter 4 — Other Registration Statement Reporting

4.5 Non-GAAP Financial Measures

4.5 Non-GAAP Financial Measures

While a company’s financial statements must be prepared in accordance with GAAP, many companies also elect to disclose non-GAAP financial measures1 — that is, numerical measures of a company’s financial performance, financial position, or cash flows for which the GAAP counterparts are adjusted in some fashion. Examples of common non-GAAP financial measures include EBITDA, adjusted EBITDA, adjusted earnings or adjusted EPS, and free cash flow.

Footnotes

1
Regulation S-K, Item 10(e)(2), defines a non-GAAP financial measure as “a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that: (i) Excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of comprehensive income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or (ii) Includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.”