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Non-financial and non-GAAP measures

BAR Chapter 2 · Area I · Blueprint I.A.2

Net income tells you how last year went. Customer retention, staff turnover and response times tell you how next year is likely to go, and adjusted earnings tell you how management wants you to see the year. The Blueprint asks you to pick relevant measures, benchmark them, use a balanced scorecard and read non-GAAP figures with a critical eye. A gym chain, Cobalt Fitness Clubs, carries the chapter.

In this chapter

1. Looking beyond the income statement
2. Benchmarking inside and outside the company
3. The balanced scorecard
4. Responsibility segments and contribution reporting
5. Customer and service measures
6. Employee, productivity and quality measures
7. Non-GAAP earnings and cash measures
8. Putting the measures together

This chapter has 8 lessons, 50 practice MCQs with explanations and 10 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Benchmarking
• the balanced scorecard
• customer and employee measures
• EBITDA, free cash flow and adjusted earnings

Chapter 1: Financial statement analysis · Chapter 3: Cost accounting