Definition of underlying basis a measure of "underlying" profits or sales tends to strip out items that distort a company's trading performance, such as exchange rate movements or acquisition costs.
It can be a more helpful metric for investors than pre-tax profits or top-line sales. However, there is no formal, universally recognised, definition, which means companies can choose what items to include and exclude.
Investors should therefore be aware that companies can use the measure to present themselves in a favourable light. It can also make comparisons, both across time for an individual company or between companies, rather hazardous. [1]