what is non operating income 
non operating income is the portion of an organization s income that is derived from activities not related to its core business operations it can include items such as dividend income profits or losses from investments as well as gains or losses incurred by foreign exchange and asset write downs non operating income is also referred to as incidental or peripheral income investopedia zoe hansenunderstanding non operating incomeearnings are perhaps the single most studied number in a company s financial statements because they show profitability compared with analyst estimates and company guidance the problem is that profit in an accounting period can be skewed by things that have little to do with the everyday running of the business for example there are occasions when a company earns a significant one off amount of income from investment securities a wholly owned subsidiary or the sale of a large piece of equipment property or land these types of gains on top of income earned from recurring events outside of the business main line of work can significantly alter a company s earnings and make it difficult for investors to measure how well the firm s operations actually fared during the reported period non operating income vs operating incomedifferentiating what income was generated from the day to day business operations and what income was made from other avenues is important to evaluate a company s real performance that is why firms are required to disclose non operating income separately from operating income operating income is an accounting figure that measures the amount of profit realized from a business s operations after deducting operating expenses such as wages depreciation and cost of goods sold cogs in short it provides information to interested parties about how much revenue was turned into profit through the company s normal and ongoing business activities operating income is recorded on the income statement toward the bottom of the income statement under the operating income line non operating income should appear helping investors to distinguish between the two and recognize what income came from where example of non operating incomethe main operations of retail stores are the purchasing and selling of merchandise which requires a lot of cash on hand and liquid assets sometimes a retailer chooses to invest its idle cash on hand in order to put its money to work if a retail store invests 10 000 in the stock market and in a one month period earns 5 in capital gains the 500 10 000 0 05 would be considered non operating income when a person sets out to analyze this retail company the 500 would be classified as nonoperating or non recurring earnings because it can t be relied on as continuous income over the long term alternatively if a technology company sells or spins off one of its divisions for 400 million in cash and stock the proceeds from the sale are considered non operating income if the technology company earns 1 billion in income in a year it s easy to see that the additional 400 million will increase company earnings by 40 to an investor a sharp bump in earnings like this makes the company look like a very attractive investment however since the sale cannot be replicated or duplicated it can t be considered recurring operating income and should be removed from performance analysis special considerationssometimes companies try to conceal poor operating profit with high non operating income beware of management teams attempting to flag metrics that incorporate inflated separate gains earnings before interest and taxes ebit for example can include income derived from activities not related to the core business and can sometimes be advertised heavily by companies to mask underwhelming operational results often a sharp spike in earnings from one period to the next will be caused by non operating income seek to get to the bottom of where money was generated and to ascertain how much of it if any is linked to the everyday running of the business and is likely to be repeated 