Hedge accounting
A special treatment that lets the result of a protective trade and the result of the item it protects meet in the same period, so profit does not jump.
How to read the number
Without it the company books the hedge revaluation immediately and the protected transaction later, and the accounts look less stable than the business.
When the metric lies
The right to this treatment must be documented and can be lost. Losing it returns all the volatility to profit while changing nothing in the trades themselves.
Also known as: cash flow hedge