| Accounting Noise | |
 The distortion of a company's true operating performance caused by the complexity and depth of accounting rules that regulate financial statement reporting. |
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 Accounting noise can be seen as both a consequence of necessary GAAP rules or the result of management's attempt at polishing the numbers to present a rosier financial picture of the firm. For example, a company that has recently undergone a significant merger may look very unprofitable on the income statement: the merger may cause serious one-time charges for the company, so it may be useful for investors to cut through the accounting noise to get a more accurate picture of the company's prospects. Conversely, an underperforming company could engage in earnings manipulation, creating accounting noise to hide their poor performance. |
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 Show and Tell: The Importance of Transparency - Clear and honest financial statements not only reflect value, they also help ensure it. Understanding Pro-Forma Earnings - These figures can either shed light on a company's performance or skew it. Find out why. Types Of EPS - The math may be simple, but to make informed investment decisions, investors need to understand the many varieties of EPS and what each represents. |
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