Chris HarounProfessor and CEO at Haroun Education Ventures

What Really Happens When a Company Reports Earnings? 📄💰

Name: What Really Happens When a Company Reports Earnings? 📄💰
Uploaded: 2025-10-07T16:09:06+00:00
Duration: 38 s
Channel: Chris Haroun
Description: In this segment, Chris Haroun explains that companies release two sets of financial statements each quarter: the GAAP (Generally Accepted Accounting…

7 Oct 2025 · 1 min

Watch on YouTube

0:38

In this segment, Chris Haroun explains that companies release two sets of financial statements each quarter: the GAAP (Generally Accepted Accounting Principles) statements, which include all non‑cash items such as depreciation, and the non‑GAAP (often called pro‑forma) statements, which adjust for those non‑cash items. He outlines how analysts can use the non‑GAAP figures to calculate free cash flow by stripping out non‑cash expenses from earnings, and also mentions that the cash flow statement can be consulted to derive the same metric.

Chapters

Whenever a company reports earnings, they usually provide two sets of financial statements every three months when they provide earnings. One set is what the accountants look at, which is called gaap, for Generally Accepted Accounting Principles. And it has all the non cash items in it, like depreciation. The other set of financial statements in that same press release are called non gaap, which some people call pro forma. Basically, it does include non cash stuff like depreciation. And so basically what you do is you use those financial statements, non gaap, and you can figure out what free cash flow is. It's basically earnings from the income statement, getting rid of all non cash stuff. Okay. And what you can also do is look at the cash flow statement to come up with that.