What does diluted EPS measure?

IAS 33 Earnings per Share requires listed companies to disclose not only basic earnings per share (EPS) but also diluted EPS. It seems that there is not widespread: This post explores the objective of the approach, the reason why the IASB’s predecessor (IASC: International Accounting Standards Committee) selected it and implications for any possible changes… Continue reading What does diluted EPS measure?

The ‘cash component of revenue’: a dangerous myth?

Some academics and investors often talk about ‘the cash component of revenue’. I understand why they use this shorthand label, but it risks causing misunderstanding. In this post, I examine the following: what is the ‘cash component of revenue’? an accounting identity linking revenue and cash receipts judgement in measuring trade receivables the ‘cash component… Continue reading The ‘cash component of revenue’: a dangerous myth?

Selecting a measurement basis

The additions in 2018 to the IASB’s Conceptual Framework for Financial Reporting included a table summarising what information various measurement basis provide. It seems that people have paid little attention to that table. In this post, I highlight that table, summarise its role and content, and explain why it is important.   Role of table… Continue reading Selecting a measurement basis