Did You Ever Look For Adjustments Closely? A hands-on approach
Hey there,
I hope you are doing great.
Let's have a look at other operating income (OOI) today. OOI is usually packed with potential adjustments - I am going to show you a hands-on approach today to identify adjustments.
Understanding other operating income means understanding the items being reported there. Oftentimes, firms report large amounts cumulated under “other”. In this case, request a split to understand its components.
During the analysis, check for out-of-period or non-recurring items and also discuss with Management to which extend these items represent recurring income. The reason for that is the consistency between historical and projected financials. If an item is completely non-recurring, remove other operating income and do not include it into the company’s business plan. Only include the recurring portion to show a sustainable picture.
Further readings
Want to know more about net debt? Read here.
How to analyze fixed assets? Read here.
And what about personnel expenses? Read here.
As always, reach out if you have any questions.
Cheers,
Jan
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