FASB seeks comments on financial key performance indicators

FASB has published an Invitation to Comment (ITC) that gives stakeholders the opportunity to provide feedback on financial key performance indicators (Financial KPIs). Stakeholders are asked to review and provide comment on the ITC by April 30, 2025. 

For the purposes of the ITC, a Financial KPI is a financial measure that is calculated or derived from the financial statements and/or underlying accounting records that is not presented in the GAAP financial statements. This includes measures derived from amounts presented in the financial statements, measures derived from adjusting amounts presented in the financial statements, and measures derived from or calculations based on other information included in the financial statements or other financial records. Examples of Financial KPIs include earnings before interest, taxes, depreciation, and amortization (EBITDA); free cash flow (FCF); organic sales growth; and adjusted net income. 

The ITC is being issued as part of the FASB’s research project on financial key performance indicators for business entities. An ITC is a staff document prepared at the direction of the FASB chair in which the Board does not express any preliminary views. Responses to the questions in this ITC will help inform the Board as it considers whether to add a project on Financial KPIs to its technical agenda and, if added, to determine the objective and scope of the project. 

In previous outreach, including the 2021 Invitation to Comment, Agenda Consultation, the FASB received feedback from stakeholders that a project on Financial KPIs should be considered. However, respondents expressed diverse views on the nature and extent of the perceived issues, whether the Board should add a project to its technical agenda, and, if a project is added, the objective of the project. 

The FASB staff is issuing this ITC to solicit additional feedback on potential standard setting for Financial KPIs, including the following: 

• Should Financial KPIs be standardized and, if so, which ones? 

• Should Financial KPIs be required or permitted to be disclosed in an entity’s GAAP financial statements and, if so, when and for what types of entities?