Making Pro Forma Information More Useful

Arnold, Jerry L.; Duggan, Joseph William
May 2002
Financial Executive;May2002, Vol. 18 Issue 3, p38
Academic Journal
The article discusses corporate reporting and pro forma disclosure of information. The focus is on making pro forma measures a complement to the numbers calculated with generally accepted accounting principles, or GAAP. The issues of "one-time items," usefulness of pro forma information in predicting future performance, treatment of good news as net income and bad news as extraordinary items, and transparency in accounting are mentioned. Examples include a non-cash write-off at Bethlehem Steel Corp., which later filed for Chapter 11 bankruptcy protection. Rules and publications from the U.S. Securities and Exchange Commission, FASB pronouncements No. 142, No. 141, and No. 131, and EBITDA--or earnings before interest, taxes, depreciation, and amortization--are also mentioned.


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