posted on 06-06-2019

Earnings Recast

Updated October 1, 2019

What is an Earnings Recast?

An earnings recast, also called an earnings restatement, is the act of disclosing amended financial statements.

How Does an Earnings Recast Work?

Let's assume Company XYZ sells its pharmaceutical division to Company ABC. The pharmaceutical division was a significant generator of revenue for Company XYZ.

After the sale, it issues an earnings recast by disclosing the last five years of financial statements -- with the pharmaceutical division excluded.

Why Does an Earnings Recast Matter?

Earnings recasts can be corrections in financial statements. They can also help investors get a comparative sense of how a company is performing without a recently divested asset, with a change in accounting method, or with some other significant change in operations.