Several new-age companies—listed as well as privately held—resort to accounting acrobatics to make their earnings appear more palatable. Though 'adjusted' and non-GAAP metrics can't be questioned legally, pro-forma earnings tend to put the entities on a morally sticky wicket
Let’s start with the kindergarten stuff. What does ‘A’ stand for? The most popular answer would be 'apple’. Can the same alphabet, and question, have a different reply? Yes, if the ones answering happen to be smart alecks! To them, ‘A’ might be ‘awesome apple’ or ‘American apple’ or ‘accomplished apple’. Apple certainly can have endless variants.
Back in 2018, America was getting a taste of Adam’s apple. A smart aleck, WeWork’s co-founder and CEO Adam Neumann, stunned the world by reportedly displaying a wide range of accounting stunts in the bond-offering document released in April. Sample the most ingenious and outrageous term: ‘Community-adjusted Ebitda’. The metric measured net income before interest, taxes, depreciation and amortisation, and ‘building-and community-level operating expenses’, which reportedly includes rent, tenancy expenses, utilities, internet, salaries of building staff, and the cost of building amenities.