Pro Forma Deception

In the past five or six years, investors have been confronted with the rise of a peculiar and sometimes deceptive practice of management’s endorsement of so-called “pro forma” financial statements and earnings. These adjusted numbers have important implications for all parties involved – shareholders, bond holders, vendors, and employees. Before you pick up another annual report, it is important to understand the potential abuses and benefits of the non-GAAP financial figures frequently found in annual reports and press releases. More...