Which earnings figure matters?

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Valuable context for investor decision-making could only be obtained by standardised rules (one size fits all) – but as with most things in life one size does not in fact suit everyone. Moneyweb keithmclachlan

Previously, I wrote about Which valuation matters? and a key input in most valuations is what the company has earned.

If someone gained, someone else lost Due to IFRS adjustments, a range of accounting entries can flow through a set of earnings that are not actually cash transactions. In theory, over time, cash flows and accounting should equal each other. In theory, there is no difference between theory and practice, but in practice, there is. Thus, a common argument is to exclude a certain accounting entry from management’s alternative earnings as it is ‘non-cash flow’ in nature.

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