In stock markets investors and financial analysts prefer to


Question - In stock markets. investors and financial analysts prefer to use pro forma earnings. There are several reasons that they are using this figure instead of GAAP earnings. Please discuss the following questions

1. What is pro forma earnings? Is there any policies regulated by the SEC for pro forma earnings?

2. What are the advantages and disadvantages of pro forma earnings compared with GAAP earnings in valuing firms in the markets?

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Accounting Basics: In stock markets investors and financial analysts prefer to
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