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normalized earning vs earning excl extra
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TOPIC: normalized earning vs earning excl extra

normalized earning vs earning excl extra 1 year, 11 months ago #333

  • yonil
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What is the difference between normalized earning and earning excluding extraordinary?
What is more commonly used for measuring company earnings?

something I think I understand but I'm not sure at all:
earning excluding extraordinary is defined by GAAP or by the country security exchange regulation and is reported in a separate field in the income statement by the company.
normalized earning is defined by Thomson Reuters and they manually/automatically calculate this field by processing every income statement and doing adjustments.
Yoni

Re: normalized earning vs earning excl extra 1 year, 10 months ago #334

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There is no easy answer to that question. Neither appear to be GAAP measures, and both vary according to the company. If you would like to stick to GAAP, you should use the unnormalized values.

My belief is that the "normalized" and "excluding extraordinary" terms are used nearly interchangeably, to refer to the non-GAAP earnings reported in company press releases (which use different methodologies from company to company).

The benefit of having an extended history of both normalized and unnormalized values is that you can compare the values over time to ensure that the company is not incurring extraordinary expenses consistently.
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