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What divides profits from losses? Interpretation

Is Twitter making money or losing it? The question may sound straightforward, but for the troubled tech company and others, it all comes down to interpretation.

For instance, according to the earnings numbers reported by much of the press and used by analysts, Twitter made $67 million in the third quarter, or 10 cents per share. But when the company computes its bottom line according to generally accepted accounting principles, it finds that it had a loss of $132 million, or 20 cents per share.

The biggest difference between the two numbers the company provides is due to stock-based compensation, or the value of the Twitter shares and options that the company gave its employees as compensation in the quarter. That expense totaled $166 million, or 30 percent of the company's revenue.

While the Financial Accounting Standards Board considers this to be an expense that must be logged in the quarter, cutting into profits, Twitter is not alone in thinking differently.

For instance, Amazon's earnings press releases highlight operating cash flow and free cash flow. It even begins the official presentation of its results with its statement of cash flows, which a company usually presents after its income statement and balance...