Business accounts are getting more and more creative in the way that they calculate earnings. Test your knowledge of the murky world of earnings reports with our OIBDA challenge.
OIBDA stands for Operating Income Before Depreciation and Amortization. If you didn't get this one, you're in for a long quiz.
Earnings reports are issued quarterly based on the start of the company's fiscal year.
The question that should be answered by an earnings report is, "Is the company making money or losing it?"
If you need "generally accepted" principles, then you know you work in a "creative" industry.
Non-operating income is more likely to represent a one-time gain, not consistent income.
Gains from outside investments do not reflect a company's operating profitibility.
Depreciation and amortization applies to one-time expenses, not normal operating expenses or "act of God"-type losses.
OIBDA is a non-GAAP accounting method, but that doesn't make it illegal.
Conveniently, many of these "extraneous" expenses would considerably lower the company's bottom line.
In most cases, OIBDA earnings are significantly higher than GAAP numbers.
EBITDA (Earnings before interest, taxes, depreciation and amortization) is almost exactly the same as OIBDA, but is more widely accepted by investors.
It's often the case that OIBDA or other non-GAAP calculations give a clearer picture of a company's current and future profitibility, but it's often a way to hide bad business performance, too.
Unlike the other choices, "Evita" is a popular rock opera by Andrew Lloyd Webber and a movie starring Madonna.
Absolutely. OIBDA calculations can turn a multimillion-dollar loss into a multimillion-dollar gain.
If a company pays more than the fair market value of an asset, the difference in prices is called good will.
The FASAB (Federal Accounting Standards Advisory Board) establishes GAAP standards on behalf of the American Institute of Certified Public Accountants.
Earnings per share is calculated by dividing a campany's net income by its total shares of public stock.
Both interest revenue and losses are excluded from EBIT earnings reports as well as OIBDA.
Depreciation can only be used to spread out the cost of tangible assets, not intellectual property.
The SEC requires companies to explain in plain English how their calculations deviate from GAAP standards.