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Pension Net Funded Status – Valuation Adjustment
This report is one of a series on the adjustments we make to GAAP data so we can measure shareholder value accurately. This report focuses on an adjustment we make to our calculation of economic book...
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Net Deferred Tax Assets and Liabilities – Valuation Adjustment
This report is one of a series on the adjustments we make to GAAP data so we can measure shareholder value accurately. This report focuses on an adjustment we make to our calculation of economic book...
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Deferred Compensation Assets and Liabilities – Valuation Adjustment
This report is one of a series on the adjustments we make to GAAP data so we can measure shareholder value accurately. This report focuses on an adjustment we make to our calculation of economic book...
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Discontinued Operations – Valuation Adjustment
This report is one of a series on the adjustments we make to GAAP data so we can measure shareholder value accurately. This report focuses on an adjustment we make to our calculation of economic book...
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Excess Cash – Valuation Adjustment
This report is one of a series on the adjustments we make to GAAP data so we can measure shareholder value accurately. This report focuses on an adjustment we make to our calculation of economic book...
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Reported Net Non-Operating Items – NOPAT Adjustment
This report is one of a series on the adjustments we make to convert GAAP data to economic earnings. Reported earnings don’t tell the whole story of a company’s profits. They are based on accounting...
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Midyear Acquisitions – Invested Capital Adjustment
This report is one of a series on the adjustments we make to convert GAAP data to economic earnings. This report focuses on an adjustment we make to convert the reported balance sheet assets into...
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Non-Operating Unconsolidated Subsidiaries—Invested Capital Adjustment
This report is one of a series on the adjustments we make to convert GAAP data to economic earnings. This report focuses on an adjustment we make to convert the reported balance sheet assets into...
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Unconsolidated Subsidiary Assets – Valuation Adjustment
This report is one of a series on the adjustments we make to GAAP data so we can measure shareholder value accurately. This report focuses on an adjustment we make to our calculation of economic book...
View ArticleFootnotes Adjustments for Earnings & Valuation Diligence
This report summarizes our series of reports on how to convert GAAP data to economic earnings and derive true shareholder value in a discounted cash flow model as well as more accurate measures of...
View ArticleMinority Interests – Valuation Adjustment
We subtract the fair value of the minority interest liability from shareholder value in our DCF model as the minority interest shareholders have the rights to that portion of the cash flows. Without...
View ArticleAdjusted Total Debt – Valuation Adjustment
The fair value of a company’s total debt is the current amount the company would need to pay to retire the debt and settle the claims of the creditors. This fair value of debt is subtracted from...
View ArticleAsset Write-Downs – Invested Capital Adjustment
For debt investors, which GAAP was primarily designed for, write-downs are analytically helpful. They provide a more accurate assessment of the liquidation value of a company’s assets. For equity...
View ArticleDeferred Compensation Assets – Invested Capital Adjustment
Deferred compensation plans delay employee compensation until a later date. The assets held for these plans are used to compensate employees in the future, not to generate profits for the company. As...
View ArticleDeferred Tax Assets and Liabilities – Invested Capital Adjustment
DTAs artificially raise reported assets and do not help generate operating profit while DTLs are like a source of interest-free financing. We remove the impact of DTAs and DTLs from our calculation of...
View ArticleOverfunded Pension Plan Assets – Invested Capital Adjustment
Overfunded pension assets are similar to excess cash, and should not be included in the calculation of return on invested capital (ROIC).The post Overfunded Pension Plan Assets – Invested Capital...
View ArticleExcess Cash – Invested Capital Adjustment
Most companies hold some cash—or cash equivalents in the form of investments—above this required amount. Companies hold excess cash in order to cushion against economic downturns, prepare for...
View ArticleAccumulated Goodwill Amortization and Unrecorded Goodwill – NOPAT Adjustment
Converting GAAP data into economic earnings should be part of every investor’s diligence process. Performing detailed analysis of footnotes and the MD&A is part of fulfilling fiduciary...
View ArticleOutstanding Employee Stock Options – Valuation Adjustment
Without careful footnotes research, investors would never know the amount of employee stock options that decrease the amount of future cash flow available to shareholders by diluting the value of...
View ArticlePreferred Stock – Valuation Adjustment
Preferred stock is a hybrid instrument that carries no voting rights but has a senior claim on assets and cash flows to common stock. Dividends usually must be paid out to preferred stock owners before...
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