Financial Intelligence Course

Question 1

Finance vs. Accounting?

Answer 1

Accounting: historical information
Finance: looks at the future (forecasting, do we have enough cash, etc.)

Question 2

GAAP

Answer 2

Generally Accepted Accounting Principles
Allows for comparisons across companies and across industries
Requires judgement calls - it’s not black and white

Question 3

What is Non-GAAP useful for?

Answer 3

Used by internal managers to make decisions going forward

Question 4

Non GAAP reporting typically excludes one-time items and non-operations related items such as:

Answer 4

Stock option expense
Amortization of intangibles
Restructuring charges

Question 5

Western Digital (FY22, Q1)
Non-GAAP is lower than GAAP by what amount for
- Revenue
- Gross margin
- Operating Expenses
- Interest and other expenses

Answer 5

• Revenue: same
• Gross margin: $30M-$50M
• Operating Expenses: $100M-$120M
• Interest and other expenses: :$10M
  “In the aggregate, non GAAP diluted earnings per share guidance excludes these items totaling $140 million to $180 million.” (slide 8)