The small but subtle difference: EBS instead of EPS

Instead of earnings per share (EPS), companies are increasingly reporting this figure in a cost-adjusted form (EBS = everything but bad stuff).

11 of the 30 DAX companies report their EPS as "adjusted", "adjusted" or "sustainable" earnings in the period 2008 to 2013. Four companies have even decided not to compare the official and adjusted figures in the abstract of the annual report. On average, EPS is increased by one third of the IFRS value or just below one euro per share. In around four out of five cases, the profit is increased and rarely reduced. Restructuring costs, follow-up costs of acquisitions and divestitures are most frequently cited as reasons for the adjustments. In terms of amount, however, impairments represent the largest adjustments. Although events are usually classified as special items or non-recurring items, they often occur repeatedly. While the profit is usually adjusted for costs, revenues or savings associated with the costs are fully included in the result. In order to avoid mixing the concepts of "payment effectiveness" and "success effectiveness", the cash flow statement should serve as a source of information instead of the adjusted profit.

Please note: This study is availabe in German only.

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