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Tagged as: Between, Companies, difference, Financial, Gaap, results
{ 3 comments… read them below or add one }
GAAP dictates what MUST be reported in a precise format; other forms of results can be reported any old way. Always be very careful of non-GAAP information! It is made to ignore certain costs that make the GAAP numbers look bad. It can be informative, but most abuse shows up in there.
GAAP (generally accepted accounting principles) is the ‘accepted’ way of reporting in the US. Non GAAP means nothing unless you know which basis is used, for instance cash basis. Non GAAP means that any measurement method could be used. In other words, it means nothing.
Internal i.e. management reporting is sometimes non GAAP. But the assumption is that management understands the basis of reporting, before tax for example.
GAAP sets the standards on how financial statements (which means portrayal of the companies’ financial status and outcome for a certain period) in general, requiring that it should meet the minimum criteria to provide a general overview of the company and to satisfy the common or general information needs of the users of a financial statements in general.
however, since not all users are the same, not all users are requiring the same amount, type of information, to satisfy such inquiries, the company is also issuing NON-GAAP financial results of the company. This non gaap results are STRICTLY not for public purposes unlike the gaap based results.
both type of financial results are informative and can be used for financial and crucial decisions to be made.