From ACT Wiki
Financial reporting - accounting principles - alternative performance measures.
Adjusted earnings measures are amounts calculated and disclosed by management that supplement the reporting and disclosures of earnings required by law and financial reporting standards.
They are believed by management to enable users of financial statements to obtain a fuller understanding of underlying performance since they exclude items which are not reflective of the normal course of business.
However, all such measures should be treated with caution, as management may - consciously or unconsciously - be influenced to present figures in ways that reflect well on its own performance.
- Adjusted earnings & adjusted profit - example
- "Adjusted profit measures, as described in note 1(c) to the consolidated financial statements, are believed by the directors to enable a reader to obtain a fuller understanding of underlying performance since they exclude items which are not reflective of the normal course of business...
- The key adjusted profit measures include adjusted operating profit.
- Adjusting items (which are excluded to arrive at adjusted performance measures) are also described on the face of the income statement and in note 7 to the consolidated financial statements.
- Adjusted earnings per share measures are derived from adjusted profit after tax with the rationale for their use being the same as for adjusted profit metrics and are reconciled to their IFRS equivalent in note 11 to the consolidated financial statements."
- Abcam plc - Annual Report - 2020.