Underlying Profit

Underlying Profit

Investors and companies themselves like to present, where relevant and appropriate, two sets of earnings and profit numbers. The official numbers will follow statutory accounting rules and other legal standards. But to offer a smoothed earnings line, analysts, investors and companies will exclude certain numbers, such as one-off, extraordinary or exceptional items as they can distort the true earnings picture. In that context, they will refer to underlying profit i.e. profit excluding these exceptional items in notes to the accounts. Banks, for example, are subject to an array of regulatory and accounting rules and valuation adjustments that have little to do with the performance of the underlying business.

logo-animationlogo-animationlogo-animation

Related terms