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QuestionsCategory: Financials QuadrantDifference between US GAAP & Non-GAAP Earnings
Thomas asked 1 year ago

Hi Victor & Rusmin,
When reading the Annual Reports of US companies, I always come across this GAAP & Non-GAAP earnings.
I understand that it is their US accounting rules but for the purpose of analysing the financials of the company, which should we follow?

1 Answers
Victor Chng answered 1 year ago

Hi Thomas,
Personally, I will always collect the GAAP financials number but I will also take note of Non-GAAP earnings for some companies. It depend on your understanding of the company, if you think that the non-gaap give a better picture of the company then use it. In most cases, I used the Gaap.

Victor Chng replied 1 year ago

On a side note, if Non-GAAP exclude all those one-off time. You need to read the company annual report to understand how they calculate the non-GAAP. If the GAAP and Non-GAAP difference is minimum then you can use the GAAP figure but if the difference is a lot then you may want to check how they calculate the Non-GAAP and use the Non-GAAP figure.