Don’t Be Fooled by Earnings: Trust EVA
MAY 11, 2020
Earnings are not always what they appear to be. When the environment deteriorates as it is in 2020 due to the coronavirus crisis, management often tries to hide mistakes and confuse the truth.
Bad news is delegated to unusual items, and before 2016, also to extraordinary charges or events that management classified as unusual and infrequent. Corporations encourage investors to focus on recurring income, so they gladly offer pro-forma income alongside GAAP earnings.