Danger of Using Non-GAAP Earnings

question 71

Essay

Danger of using non-GAAP earnings
Explain non-GAAP earnings and the danger of using these earnings to assess the results of operations and the financial position of a company.

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Definitions:

Long Run

In economics, a period in which all inputs or factors of production can be varied, allowing companies to adjust all aspects of their operations.

Economic Profit

The difference between total revenue and total cost, including both explicit and implicit costs, representing the additional gain over the opportunity cost.

Perfectly Competitive Industry

An industry in which numerous small firms produce identical products, where no single firm can influence the market price, and all firms are price takers.

AC

Alternating current, a type of electrical current in which the flow of electric charge periodically reverses direction.