Glossarytaught in M1.07, M1.04, M1.11
US GAAP
Also called United States GAAP, US generally accepted accounting principles.
The accounting rules American companies follow, set by the Financial Accounting Standards Board and enforced for listed companies by the SEC. Most differences from Ind AS and IFRS are small, but a few move the numbers analysts use most.
Four are worth holding. An operating lease keeps a single straight-line lease cost in the income statement, so EBITDA isn't lifted the way it is under Ind AS 116. LIFO inventory is allowed. Most research and development is expensed as incurred. And interest paid is part of operating cash flow, so a US company shows lower operating cash flow than the same business would report in India.
A US retailer with $1,000 million of EBITDA before $150 million of operating lease cost reports $850 million of EBITDA under US GAAP. Under Ind AS the same rent becomes depreciation and interest, and EBITDA stays near $1,000 million. Put both companies on one basis before you compare EV/EBITDA multiples.
Adjust first, then compare.
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