Alternative performance measures

Sarah McVay, Edgar Rodriguez-Vazquez, Sara Toynbee and Benjamin C. Whipple

Chapter 7 in Handbook on the Financial Reporting Environment, 2025, pp 117-139 from Edward Elgar Publishing

Abstract: GAAP-based financial reports contain a multitude of performance measures such as revenue, earnings, earnings per share, and cash from operations. Managers also frequently voluntarily provide “alternative” performance measures (APMs), which may allow for more precise or unique insights about the company and are often unique to a company's industry. These APMs include summary measures of past performance (adjusted earnings, EBITDA, free cash flow), efficiency ratios (sales per square foot, revenue per airline mile), and demand metrics (bookings, customer retention). It is important to understand that APMs can be used strategically by management, especially given that they are less uniform than GAAP metrics and subject to less monitoring. This chapter is intended to help you understand the holes that APMs fill, as well as to help you get a sense of both the benefits and the costs of incorporating APMs into your decision-making.

Keywords: Alternative performance measures; Key performance measures; Non-GAAP metrics (search for similar items in EconPapers)
Date: 2025
ISBN: 9781800888678
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.elgaronline.com/doi/10.4337/9781800888685.00018 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:20826_8

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Darrel McCalla ().