Gaap Earnings: Earnings and Company Profits

gaap earnings: If earnings are lower than expected, the stock should go down, according to Market Watch. The price-to-earnings ratio is the most common valuation metric in the financial media. If earnings beat expectations, they say it a reason for the stock to go up. You might think, given their prominence and the fact that the Financial Accounting Standards Board governs their calculation, that earnings reflect a company profits. CFOs themselves admit they frequently exploit these loopholes to prop up earnings and ensure management gets their bonuses. Instead, GAAP earnings are subject to a number of accounting loopholes and distortions that cause them to diverge from true cash profits. (news.financializer.com). As reported in the news.