THE FINANCE GHOST: Smoke and mirror acronyms

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There is plenty of salesmanship in company reporting — especially when it comes to earnings metrics. Here’s how to see through the BS

Understanding a set of financial results is difficult even before management teams get the crayons out to add some creativity to the reported metrics. Faced with a raft of different earnings metrics, you need your wits about you.

Let’s start with what HEPS means. The acronym stands for headline earnings per share, a South African concept designed to stop companies from reporting utter nonsense in the same way that the Americans love doing. “Adjusted earnings before interest, taxes, depreciation and amortisation” is abused to incredible levels on the US market, allowing executives to pretend that all the minor inconveniences don’t exist...

 

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