Merrill backs a return to basics

MERRILL Lynch has demanded its US analysts to go back to basics and start reporting corporate earnings under generally accepted accounting principles (GAAP) alongside the pro-forma numbers preferred by companies.

It said that three-quarters of the S&P 500 companies used some form of proforma reporting and that it was time to highlight the GAAP earnings and explain how they differed from the pro-forma ones.

Pro-forma earnings have been criticised because there is no consistency in what is and is not excluded.