Difference between GAAP and Non-GAAP Earnings: A Case Study of Qantas Airways and Star Entertainment Group Limited

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Research Project
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Table of Contents
Introduction......................................................................................................................................2
Quantas Airways Limited................................................................................................................2
Star Entertainment Group Limited..................................................................................................2
Distinction between the Earnings method utilized by the different corporate entities....................3
Literature Review............................................................................................................................4
GAAP earnings and Non-GAAP earnings..................................................................................4
Quantas and Star Entertainment Group Limited.........................................................................5
Methodology....................................................................................................................................5
Conclusion.......................................................................................................................................5
References........................................................................................................................................7

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Introduction
The Generally Accepted Accounting Principles had been developed by the Financial
Accounting Standards Board for the purpose of standardizing the process of financial reporting
by the providence of formats and rules and is essentially carried out for facilitating of the
financial position of an organization by the creditors and investors. The utilization of the
Generally Accepted Accounting Principles method of earning facilitates the reflection of the fair
image of the business entity. Moreover, the annual reports of the different business entities that
have been prepared on the basis of the GAAP can be reliably compared and analyzed.
The Non–GAAP earnings on the other hand, refers to the accounting regulation that has
been utilized by the corporate entities for the purpose of displaying their own accounting figures.
Such an accounting regulation is also legally supported as long as these accounting treatments
have been disclosed as Non-GAAP in the annual report of the company and the providence of
the reconciliation is carried out between the adjusted and regular results.
This particular study aims to focus on the difference between the GAAP and the Non-
GAAP earnings. Moreover, the organizations that have been further selected for the better
understanding of the research study are the Quantas Airways Limited and Star Entertainment
Group Limited. These examples of the corporate entities have been utilized for the purpose of
developing the particular research proposal that whether the accounting regulation of GAAP
earnings are more useful in comparison to the Non-GAAP earnings.
Qantas Airways Limited
The first company that has been selected for the purpose of the study is the Quantas
Airways Limited that has been a domestic and international airline service provider. This airline

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service provider has been operating globally and is based out of Australia. The profitability
graph of the selected company has gone through regular crests and troughs until the financial
year of 2016.
Star Entertainment Group Limited
The Star Entertainment Group Limited has been one of the largest entertainment and
gaming groups on Australia. The Star Entertainment Group Limited has essentially been a
corporate entity that has demerged from the parent entity in June 2011. The initial name of the
corporate entity had been Echo Entertainment Group Limited. The demerger from the parent
entity resulted in the occupying of the casinos business and from November 2015, the parent
entity came to be known as Star Entertainment Group Limited. The Star Entertainment Group
Limited has been listed under the top 100 listed corporate entities of Australia and operates under
three major hotels and casinos of Australia namely Treasury Casino and Hotel in Brisbane, The
Star Gold Coast on the Gold Coast and The Star, Sydney. The net profit that has been derived by
the firm for the financial year of 2017 revolves around the figure of $264.4 million.
Distinction between the Earnings method utilized by the different corporate entities
The particular distinction between the corporate entities utilizing the particular mode of
accounting regulations is that Quantas Airways does utilize the Non-GAAP methods while the
corporate entity of Star Entertainment Group Limited utilizes the GAAP earning method. The
particular rationale that has been provided by the executives of the particular airlines entity is
that the utilization of the non-statutory metrics for the purpose of preparation of the financial
statements have resulted in the resolving of the particular issues like the arrival at the adjusted
underlying profit and is generally higher than the reported number that is arrived at, by utilizing
GAAP. The management of the corporate entity further claims that the utilization of the Non-