Non-Operating Income

Your business entity generates financial value by generating regular operating revenues reflected on your P&L as your Gross Sales. However, once in a while opportunity presents itself to generate irregular, one-time revenues. This ‘opportunistic’ revenue is usually called Non-Operating Income (although ‘Revenue’ would be a more accurate term).

Examples include sales of corporate assets, one-time profitable projects in areas other than the ‘normal’ business specialty, dividend income, profits from investments, gains incurred due to foreign exchange rate fluctuations, etc.

When analyzing a company's performance over a recent quarter or year, it is important to differentiate between operating and non-operating revenues. For example, if a company's net income experienced a sudden increase this year or this quarter, you must always check whether it happened because the company made a quantum leap in its overall performance or just got lucky and sold a non-core asset at a very attractive price. Obviously, your conclusions and recommendations in the latter case would be markedly different.