FASB Considers Seeking More-Detailed Data

By John S. McClenahen Spurred in part by companies' increasing use of pro-forma earnings statements in press releases and information provided to securities analysts, the Financial Accounting Standards Board (FASB), Norwalk, Conn., is considering taking a new look at the ways companies report financial performance. One result of the review could be that companies would be required to provide some specific financial metrics, including ratios, in their financial statements. What's more, if the FASB decides that EBITDA (earnings before interest, taxes, depreciation, and amortization) is a key indicator of performance, companies could be required to calculate on a consistent basis and post it on a separate accounting line. However, early indications are that if the FASB decides to go ahead with the project, it is likely to take a minimalist approach. That would likely mean the FASB would focus on whether just a few line items, subtotals, and totals should be defined in the accounting standards and companies required to report them in financial statements that are prepared according to U.S. generally accepted accounting principles. The FASB is seeking comments on the proposed project by Sept. 19, 2001.

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