6
4/14/2003
Standard & Poor’s Core
Earnings vs. GAAP
•Concerns
about GAAP:
–GAAP
net income doesn’t tell the whole story.
–GAAP
lets companies write their own definitions for operating earnings.
–GAAP
tries to be all things to all people.
•Standard
& Poor’s response:
–Standard
& Poor’s Core Earnings targets a company’s core business.
–Standard
& Poor’s Core Earnings focuses on consistent comparisons.
–Standard
& Poor’s Core Earnings is used in investment analysis.