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When a company announces quarterly earnings, analysts and investors often focus on the non-GAAP or adjusted earnings number.
These adjusted numbers exclude items that management deems not reflective of ongoing operations.
For example, if a company has to write-off equipment or the value of certain financial securities, earnings will take a hit. But the adjusted number will add back this negative impact.
Critics argue that adjusted earnings obscure the true nature of corporate profitability
In a new report examining corporate profits, UBS strategist Julian Emanuel notes argues that earnings quality has improved significantly since the financial crisis.
He included this chart of S&P 500 company write-offs, which are down sharply.
"Broadly speaking, earnings are cleaner - and the big spike in write-offs on 2009 is primarily due to distress in the Financial sector," wrote Emanuel in an email to Business Insider.
There's always something being written off in corporate America. More recently, the noise appears to be coming from the basic materials sector, an industry plagued by falling commodity prices and too much capacity.
But like Emanuel said, earnings are cleaner.
UBS