earnings disclosure: how useful is pro forma versus GAAP in evaluating
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Please see attached question on earnings disclosure.
How useful is pro forma versus GAAP in evaluating:
a) recent financial performance
b) expectation of future earnings
c) credibility of management
d) quality of earnings
e) equity valuation
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Solution Summary
The expert determines how useful is pro forma versus GAAP in evaluating. Earnings disclosure are analyzed.
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How useful is pro forma versus GAAP in evaluating:
a) recent financial performance: when evaluating, GAAP would be more beneficial when evaluating financial performance because there is evidence of actual vs budgeted financial data. In this situation, the manager can evaluate how close the projections were (pro forma) in comparison to actual data displayed using GAAP rules.
b) expectation of future earnings - The proforma statement allows management to plan for future revenues, expenses, and growth. Initially with ...
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