Definition:

Other Interest or Dividend Income refers to the earnings received from investments that are not part of the primary business operations. This can include interest earned on savings accounts, bonds, or other fixed-income investments, as well as dividends received from stocks or mutual funds.

Examples

Examples of Other Interest or Dividend Income include interest earned from a corporate savings account, dividends received from shares in a publicly traded company, or interest income from a bond investment.

Formula:

There is no specific formula for Other Interest or Dividend Income as it is typically reported as a total sum on financial statements. However, it can be calculated as:

Total Interest Income + Total Dividend Income

How to use the metric:

This metric is used to assess the additional income generated from investments, separate from the core business activities. It provides insight into the company's investment strategy and financial health, and can be used to evaluate the overall return on investments.

Limitations:

One limitation is that this metric does not reflect the performance of the core business operations. It can also be volatile, as it depends on external factors such as interest rates and market conditions. Additionally, it may not be sustainable if it relies heavily on one-time gains or non-recurring income.

Applies to:

This metric is applicable to industries with significant investment activities, such as financial services, real estate, and conglomerates with diversified portfolios.

Doesn't apply to:

Industries that do not engage in investment activities as part of their business model, such as retail or manufacturing, may find this metric less relevant. These industries typically focus on operational income rather than investment income.

Summary:

Other Interest or Dividend Income represents earnings from investments outside of a company's primary operations. It provides insight into a company's investment performance and financial strategy but should be considered alongside core business metrics to get a comprehensive view of financial health.