Income Statement Non Operating Revenue

How to distinguish between operating nonoperating income in relation to the income statement.

Income statement non operating revenue. Now if we have a close look at the income statement shown above it is quite obvious to point at the non operating line item i e gain on sale of the asset. While computing operating revenue other income comprising of return for using entity s resource by other entities like royalty interest and dividend are included in the income statement after operating profit is computed. A business might attempt to use non operating income to mask poor operational results. However some types of income such as dividend income are of a recurring nature and yet are still considered to be part of non operating income.

But to come to this line item s value based on some formula we used a back calculation formula which gives the same value as for the gain on sale of assets. If you want to compare your business s revenue from period to period look at your operating revenue. Non operating income is the portion of an organization s income that is derived from activities not related to its core operations. Separating information on the income statement into operating and.

It s important to consider both operating and non operating items on a income statement because a business could seem profitable in its primary activities and still be facing huge losses from non operating expenses. A hospital might recognize the following items as non operating revenues and expenses as such operations represent other health care related activities. Non operating income is more likely to be a one time event such as a loss on asset impairment. Net operating income 150 000 200 000 40 000 30 000 20 000.

Non operating income can include such items as dividend income. Operating profit operating revenue minus operating expenses. Income statements can provide critical insight for investors regarding the health of a company if they know how to read them. This gives you more of an idea of whether your company is growing or declining since non operating revenue is irregular.