Most common adjustments when scrubbing financials
What are some of the most common items to scrub for when adjusting EBIT and what are some good search terms to find them?
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Forget about EBIT, it's all about EBITDA. Restructuring costs, impairment, amortization, depreciation, goodwill, gain/loss on disposal of PPE, stock-based compensation, amortization and impairment related to capitalized software. In general, you'll just have to check the financials for non-recurring, non-core stuff. Check the 8Ks for any non-GAAP metrics.
Also look at older amendments. I remember the first time I pulled data I got it perfect but got screamed at for using numbers that were no longer relevant. Rookie mistake XD
Looks that most unusual/infrequent items have been discussed. I might add: foreign currency adjustments (bull shit, I know but they do it) and severance (which may be bulked into restructuring).
Each industry has their own nuisances, so read through a few press releases and jot down the big ones. Chances are 66% of the time it works every time.
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