Term · Accounting & Data Quality
Alternative Performance Measures / APM
In briefAlternative Performance Measures are financial metrics outside the official accounting framework, such as adjusted EBITDA, organic growth or a company's own free-cash-flow definitions. Because they are not standardised, transparent definitions, reconciliations and comparability are what count.
Definition
APMs are historical or forward-looking financial metrics outside the applicable accounting framework. Examples are adjusted EBITDA, organic growth or certain free-cash-flow definitions.
How it is calculated
Formula. No general formula. Issuers are expected to present the definition, calculation, reconciliation and comparability transparently. The metric is not standardised; the issuer's definition and delineation are decisive.
Why it matters for small caps
Small caps frequently use adjusted metrics to explain special effects, restructurings or growth costs; this increases the need for clear reconciliations.
Common misreadings
- APMs are often treated like IFRS or HGB metrics. Adjustments can be selective and differ from company to company.
In the process
Frequently asked
What are Alternative Performance Measures?
They are self-defined metrics that a company reports in addition to the IFRS or HGB figures. They are meant to make the business development more vivid.
How should investors deal with APMs?
For each metric you should check how it is defined and how it can be reconciled to the audited financial statement figures. Only then does the comparison between companies remain robust.
What danger lies in Alternative Performance Measures?
Because each company chooses its own adjustments, APMs can appear selective and present the situation more favourably. They do not replace the regulated metrics.
Related terms
Sources
Primary
ESMA – Guidelines on Alternative Performance Measures
https://www.esma.europa.eu/document/esma-guidelines-alternative-performance-measures
https://www.esma.europa.eu/document/esma-guidelines-alternative-performance-measures
Methodology
U.S. SEC – Non-GAAP Financial Measures
https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/non-gaap-financial-measures
https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/non-gaap-financial-measures
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.