Definition:
Adjusted Current Earnings (ACE) is a non-GAAP financial metric that aims to provide a more comprehensive view of a company’s operating performance by excluding certain non-recurring items that can distort earnings. These non-recurring items may include:
- Restructuring charges: Costs associated with reorganizing a business, such as severance pay or asset write-downs.
- Impairments: Losses on assets that have become less valuable.
- Gains or losses from discontinued operations: Profits or losses from businesses that have been sold or discontinued.
- Foreign exchange gains or losses: Gains or losses from fluctuations in foreign exchange rates.
Why is ACE used?
- Comparability: ACE can help investors compare the operating performance of companies in different industries or with different accounting policies.
- Focus on core operations: ACE focuses on a company’s core operations and excludes non-recurring items that may not reflect the company’s ongoing performance.
- Decision-making: ACE can be used to make informed decisions about investing in a company.
It’s important to note that ACE is a non-GAAP metric and should be used in conjunction with GAAP earnings. While ACE can provide valuable insights into a company’s operating performance, it’s essential to consider the underlying reasons for any adjustments made to GAAP earnings.
In essence, ACE is a metric that aims to provide a more comprehensive view of a company’s operating performance by excluding certain non-recurring items that can distort earnings.
