what are non gaap earnings 
non gaap earnings are an alternative accounting method used to measure the earnings of a company many companies report non gaap earnings in addition to their earnings based on generally accepted accounting principles gaap these pro forma figures which exclude one time transactions can sometimes provide a more accurate measure of a company s financial performance from direct business operations however investors need to be wary of a company s potential for misleading reporting which excludes items that have a negative effect on gaap earnings quarter after quarter understanding non gaap earningsto understand non gaap earnings it s important to understand gaap earnings gaap earnings are a common set of standards accepted and used by companies and their accounting departments gaap earnings are used to standardize the financial reporting of publicly traded companies the justification for reporting non gaap earnings is that large one off costs such as asset write downs or organizational restructuring should not be considered normal operational costs because they distort the true financial performance of a company therefore some companies provide an adjusted earnings number that excludes these nonrecurring items commonly used non gaap financial measures include earnings before interest and taxes ebit earnings before interest taxes depreciation and amortization ebitda adjusted revenues free cash flows core earnings and funds from operations 