Pro forma income is an estimate of how much the company would have earned without including the negative effect of exceptional "one-time events", supposedly in order to show investors how much money the company would have made under normal circumstances if these exceptional, one-time events had not occurred.
charge that, in most cases, the "one-time events" are normal business events, such as an acquisition of another company or a write-off of a cancelled project or division, and that pro forma reporting is an attempt to mislead investors by painting a rosy financial picture.
EBITDA stands for "earnings before interest, taxes, depreciation, and amortization", and is also criticised for being an attempt to mislead investors.
Warren Buffett has criticised EBITDA reporting, famously asking, "Does management think the tooth fairy pays for capital expenditures?"
[citation needed] It is common for some other companies, such as real estate investment trusts, to present reports using a standard called FFO, or "Funds From Operations".