Definition:

Other Operating Income refers to the revenue generated from activities that are not part of a company's core business operations. This can include income from investments, rental income, or any other secondary business activities.

Examples

Examples of Other Operating Income include rental income from leasing out property, dividends from investments, gains from the sale of assets, and income from licensing agreements.

Formula:

There is no specific formula for Other Operating Income as it is typically a sum of various non-core income sources. It is usually calculated as:

Other Operating Income = Total Non-Core Revenue Sources

How to use the metric:

Other Operating Income is used to assess the contribution of non-core activities to a company's overall profitability. It helps in understanding the diversification of income sources and can provide insights into the financial health and risk profile of a business.

Limitations:

One limitation is that Other Operating Income can fluctuate significantly, making it less reliable for predicting future performance. It may also obscure the true performance of core business operations if not reported separately.

Applies to:

This metric is applicable to industries where companies engage in diverse activities beyond their primary operations, such as real estate, manufacturing, and conglomerates.

Doesn't apply to:

Industries with highly focused operations, such as pure-play technology companies or specialized service providers, may find this metric less relevant as they typically have limited non-core income sources.

Summary:

Other Operating Income is a financial metric that captures revenue from non-core business activities. It provides insights into additional income streams but may vary widely and should be analyzed in conjunction with core business performance.