Can someone quickly offer me advice on a project for my business class
Hello, for one of my business classes I have to pretend I am writing a Memo to the CFO of uber on why or why not we should include non-GAAP measures in Ubers IPO reporting.
From my understanding, (I may be wrong) GAAP is the common practice but isn't always completely accurate. Additionally, Non-GAAP often received a higher listing price, but is a bit riskier. I feel like Uber should use GAAP measures. Does anyone agree or have any insight they can offer me? I appreciate it a lot.
EBITDA is not US GAAP nor IFRS defined, but seems like very relevant metric. Think your case is all about how to normalise/adjust your profit numbers to show what the company’s potential is. Uber hands out discount codes in countries they enter, something you could normalise for to see underlying performance.
All public presentations that reference non-GAAP figures must include a reconciliation to GAAP.
Investors like to see non-GAAP numbers because they supplement GAAP reporting. Management gets to highlight metrics that it feels are relevant to the particular business. GAAP tries to be one-sized fits all, and therefore often falls short in providing useful investor info. Obviously, some management teams can really push the envelope with selectively reporting only attractive metrics and never-ending adjustments, but the reconciliation to GAAP is always there. At some point, caveat emptor.
IPO presentations are a marketing exercise. If management doesn't highlight parts of the business that make it attractive, its failing in its duty to existing shareholders. The trick is not looking too much like used car salesmen so they can maintain investor trust going forward.
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